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Whatever it takes? The European Central Bank's Sovereign Debt Interventions in the Eurozone Crisis

Year 2016, Volume: 2 Issue: 2, 39 - 52, 30.11.2016

Abstract

The unprecedented power of the European Central Bank (ECB) in the Eurozone crystallized throughout the crisis. The Bank used its power for enforcing the terms of the sovereign debt contracts in the monetary union and imposing an austerity framework to the debtors of the periphery at the same time. Sovereign debt interventions and the unconventional policy measures by the ECB from 2009 to 2016; their timing, targets and the conditionality, undermine the prevalent perspective in the eld of political economy of sovereign debt, attaching a particularity to the sovereign debt
contracts because of the lack of enforcement by a third party. In stark contrast, dominant forms of policy making and the pro-cyclicality of the nancial markets strengthened the position of the ECB as the enforcer. The impact has been consolidation of the policy levels in the Eurozone -fiscal policy as the bridge between monetary policy on a supranational level and labour reform on national level - and the intermingling of monetary and fiscal policies.

References

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  • Aguiar, M., and M. Amador (2013): Sovereign debt: a review, Discussion paper, National Bureau of Economic Research.
  • Aizenman, J. (2015): The Eurocrisis: Muddling through, or on the Way to a More Perfect Euro Union&quest, Comparative Economic Studies, 57(2), 205221.
  • Akçay, Ümit ve Güngen, A. R. (2016): Finansallaşma, borç krizi ve çöküş: Küresel kapitalizmin geleceği, .
  • Altavilla, C., D. Giannone, and M. Lenza (2014): The nancial and macroeconomic effects of OMT announcements, .
  • Arora, M. (2016): Changing Rules of the Game of Global Finance: Glimpses from a Sovereign Debt Restructuring Episode,.
  • Baimbridge, M., and P. Whyman (2016): Crisis in the eurozone: causes, dilemmas and solutions. Springer.
  • Beirne, J., L. Dalitz, J. Ejsing, M. Grothe, S. Manganelli, F. Monar, B. Sahel, M. Susec, J. Tapking, and T. Vong (2011): The impact of the Eurosystem's covered bond purchase programme on the primary and secondary markets, ECB Occasional Paper, (122).
  • Berghahn, V., and B. Young (2013): Reections on Werner Bonefeld's 'Freedom and the Strong State: On German Ordoliberalism'and the Continuing Importance of the Ideas of Ordoliberalism to Understand Germany's (Contested) Role in Resolving the Eurozone Crisis, New Political Economy, 18(5), 768778.
  • Bonefeld, W. (1995): Money, Equality and Exploitation: An Interpretation of Marx's Treatment of Money, GLOBAL CAPITAL, NATIONAL STATE AND THE POLITICS OF MONEY, p. 178.
  • Bonefeld, W. (2012): Freedom and the strong state: on German ordoliberalism, New Political Economy, 17(5), 633656.
  • Bonefeld, W. (2015): European economic constitution and the transformation of democracy: On class and the state of law, European Journal of International Relations, pp. 867886.
  • Bruff, I. (2014): The rise of authoritarian neoliberalism, Rethinking Marxism, 26(1), 113129.
  • Bulow, J., and K. Rogoff (1989): A Constant Recontracting Model of Sovereign Debt, The Journal of Political Economy, pp. 155178.
  • Cardoso, J. L., and P. Lains (2010): Paying for the liberal state: the rise of public nance in nineteenth-century Europe. Cambridge University Press.
  • Das, U. S., M. G. Papaioannou, and C. Trebesch (2012): Sovereign debt restructurings 1950-2010: literature survey, data, and stylized facts. International Monetary Fund.
  • De Grauwe, P., and Y. Ji (2015b): Quantitative easing in the Eurozone: It's possible without fiscal transfers, VOX CEPR's Policy Portal, 15th January.
  • de Grauwe, P., Y. Ji, et al. (2015a): Market sentiments and the sovereign debt crisis in the Eurozone, Discussion paper, Collaborative EU Project FinMaP-Financial Distortions and Macroeconomic Performance: Expectations, Constraints and Interaction of Agents.
  • Eaton, J., and M. Gersovitz (1981): Debt with potential repudiation: Theoretical and empirical analysis, The Review of Economic Studies, 48(2), 289-309.
  • For European Parliament's Committee on Economic, B. P., and M. Affairs (2012): Crisis Response of Central Banks: The ECB Policy in Comparison to the Policy of FED and the Bank of England. European Central Bank Brussel.
  • Frankfurt, E. (2011a): The European Central Bank, the Eurosystem, the European System of Central Banks, .
  • Frankfurt, E. (2011b): The Monetary Policy of ECB.
  • Frankfurt, E.(2015): Financial Stability Review.
  • Gabor, D. (2014): Learning from Japan: the European Central Bank and the European sovereign debt crisis, Review of Political Economy, 26(2), 190-209.
  • Gill, S. (1998): European governance and new constitutionalism: economic and monetary union and alternatives to disciplinary neoliberalism in Europe, New Political Economy, 3(1), 526.
  • Gungen, A. R. (2015): Kapitalist Devleti Borcuyla Türetmek: Bozuk Terazi ve Müşterek Çıkarın Liberal Hakların, Hukukun ve Devletin Sınırları, ed. by B. Erdağı. NotaBene, Ankara.
  • Hu, K. (2014): The institutional innovation of the lender of last resort facility in the Eurozone, Journal of European Integration, 36(7), 627-640.
  • Mann, G. (2013): The monetary exception: Labour, distribution and money in capitalism, Capital & Class, 37(2), 197-216.
  • Marx, K. (2015): Capital: a critique of political economy, Volume 1. Arsalan Ahmed.
  • Nesvetailova, A. (2010): Financial alchemy in crisis: The great liquidity illusion. Pluto.
  • Palan, R. (2015): Futurity, pro-cyclicality and nancial crises, New Political Economy, 20(3), 367-385.
  • Praet, P. (2015): Public sector security purchases and monetary dominance in a monetary union without a scal union, in Speech given at the The ECB and its Watchers XVI Conference, Frankfurt, vol. 11.
  • Rodriguez, C., C. A. Carrasco, et al. (2014): ECB Policy Responses between 2007 and 2014: a chronological analysis and a money quantity assessment of their eects, Discussion paper.
  • Seidel, M. (2012): The Constitutional Design of the European Central Bank, DICE Report, 10(1), 14.
  • Soederberg, S. (2005): The transnational debt architecture and emerging markets: the politics of paradoxes and punishment, Third World Quarterly, 26(6), 927-949.
  • Soederberg, S.(2014): Debtfare states and the poverty industry: Money, discipline and the surplus population. Routledge.
  • Sotiropoulos, D. P., J. Milios, and S. Lapatsioras (2014): An outline of a progressive resolution to the Euro-area sovereign debt overhang: How a ve-year suspension of the debt burden could overthrow austerity, Levy Economics Institute, Working Papers Series, (819).
  • Stasavage, D. (2003): Public debt and the Birth of the democratic state: France and Great Britain 1688-1789. Cambridge University Press.
  • Thompson, H. (2015): Germany and the Euro-Zone Crisis: The European Reformation of the German Banking Crisis and the Future of the Euro, New Political Economy, 20(6), 851-870.
  • Trebesch, C., and J. Zettelmeyer (2014): ECB interventions in distressed sovereign debt markets: The case of Greek bonds, .
  • Tsipras, A. (2015): We Don't Want to Go on Borrowing Forever, Spiegel Online.
Year 2016, Volume: 2 Issue: 2, 39 - 52, 30.11.2016

Abstract

References

  • Agamben, G. (2005): State of exception. University of Chicago Press.
  • Aguiar, M., and M. Amador (2013): Sovereign debt: a review, Discussion paper, National Bureau of Economic Research.
  • Aizenman, J. (2015): The Eurocrisis: Muddling through, or on the Way to a More Perfect Euro Union&quest, Comparative Economic Studies, 57(2), 205221.
  • Akçay, Ümit ve Güngen, A. R. (2016): Finansallaşma, borç krizi ve çöküş: Küresel kapitalizmin geleceği, .
  • Altavilla, C., D. Giannone, and M. Lenza (2014): The nancial and macroeconomic effects of OMT announcements, .
  • Arora, M. (2016): Changing Rules of the Game of Global Finance: Glimpses from a Sovereign Debt Restructuring Episode,.
  • Baimbridge, M., and P. Whyman (2016): Crisis in the eurozone: causes, dilemmas and solutions. Springer.
  • Beirne, J., L. Dalitz, J. Ejsing, M. Grothe, S. Manganelli, F. Monar, B. Sahel, M. Susec, J. Tapking, and T. Vong (2011): The impact of the Eurosystem's covered bond purchase programme on the primary and secondary markets, ECB Occasional Paper, (122).
  • Berghahn, V., and B. Young (2013): Reections on Werner Bonefeld's 'Freedom and the Strong State: On German Ordoliberalism'and the Continuing Importance of the Ideas of Ordoliberalism to Understand Germany's (Contested) Role in Resolving the Eurozone Crisis, New Political Economy, 18(5), 768778.
  • Bonefeld, W. (1995): Money, Equality and Exploitation: An Interpretation of Marx's Treatment of Money, GLOBAL CAPITAL, NATIONAL STATE AND THE POLITICS OF MONEY, p. 178.
  • Bonefeld, W. (2012): Freedom and the strong state: on German ordoliberalism, New Political Economy, 17(5), 633656.
  • Bonefeld, W. (2015): European economic constitution and the transformation of democracy: On class and the state of law, European Journal of International Relations, pp. 867886.
  • Bruff, I. (2014): The rise of authoritarian neoliberalism, Rethinking Marxism, 26(1), 113129.
  • Bulow, J., and K. Rogoff (1989): A Constant Recontracting Model of Sovereign Debt, The Journal of Political Economy, pp. 155178.
  • Cardoso, J. L., and P. Lains (2010): Paying for the liberal state: the rise of public nance in nineteenth-century Europe. Cambridge University Press.
  • Das, U. S., M. G. Papaioannou, and C. Trebesch (2012): Sovereign debt restructurings 1950-2010: literature survey, data, and stylized facts. International Monetary Fund.
  • De Grauwe, P., and Y. Ji (2015b): Quantitative easing in the Eurozone: It's possible without fiscal transfers, VOX CEPR's Policy Portal, 15th January.
  • de Grauwe, P., Y. Ji, et al. (2015a): Market sentiments and the sovereign debt crisis in the Eurozone, Discussion paper, Collaborative EU Project FinMaP-Financial Distortions and Macroeconomic Performance: Expectations, Constraints and Interaction of Agents.
  • Eaton, J., and M. Gersovitz (1981): Debt with potential repudiation: Theoretical and empirical analysis, The Review of Economic Studies, 48(2), 289-309.
  • For European Parliament's Committee on Economic, B. P., and M. Affairs (2012): Crisis Response of Central Banks: The ECB Policy in Comparison to the Policy of FED and the Bank of England. European Central Bank Brussel.
  • Frankfurt, E. (2011a): The European Central Bank, the Eurosystem, the European System of Central Banks, .
  • Frankfurt, E. (2011b): The Monetary Policy of ECB.
  • Frankfurt, E.(2015): Financial Stability Review.
  • Gabor, D. (2014): Learning from Japan: the European Central Bank and the European sovereign debt crisis, Review of Political Economy, 26(2), 190-209.
  • Gill, S. (1998): European governance and new constitutionalism: economic and monetary union and alternatives to disciplinary neoliberalism in Europe, New Political Economy, 3(1), 526.
  • Gungen, A. R. (2015): Kapitalist Devleti Borcuyla Türetmek: Bozuk Terazi ve Müşterek Çıkarın Liberal Hakların, Hukukun ve Devletin Sınırları, ed. by B. Erdağı. NotaBene, Ankara.
  • Hu, K. (2014): The institutional innovation of the lender of last resort facility in the Eurozone, Journal of European Integration, 36(7), 627-640.
  • Mann, G. (2013): The monetary exception: Labour, distribution and money in capitalism, Capital & Class, 37(2), 197-216.
  • Marx, K. (2015): Capital: a critique of political economy, Volume 1. Arsalan Ahmed.
  • Nesvetailova, A. (2010): Financial alchemy in crisis: The great liquidity illusion. Pluto.
  • Palan, R. (2015): Futurity, pro-cyclicality and nancial crises, New Political Economy, 20(3), 367-385.
  • Praet, P. (2015): Public sector security purchases and monetary dominance in a monetary union without a scal union, in Speech given at the The ECB and its Watchers XVI Conference, Frankfurt, vol. 11.
  • Rodriguez, C., C. A. Carrasco, et al. (2014): ECB Policy Responses between 2007 and 2014: a chronological analysis and a money quantity assessment of their eects, Discussion paper.
  • Seidel, M. (2012): The Constitutional Design of the European Central Bank, DICE Report, 10(1), 14.
  • Soederberg, S. (2005): The transnational debt architecture and emerging markets: the politics of paradoxes and punishment, Third World Quarterly, 26(6), 927-949.
  • Soederberg, S.(2014): Debtfare states and the poverty industry: Money, discipline and the surplus population. Routledge.
  • Sotiropoulos, D. P., J. Milios, and S. Lapatsioras (2014): An outline of a progressive resolution to the Euro-area sovereign debt overhang: How a ve-year suspension of the debt burden could overthrow austerity, Levy Economics Institute, Working Papers Series, (819).
  • Stasavage, D. (2003): Public debt and the Birth of the democratic state: France and Great Britain 1688-1789. Cambridge University Press.
  • Thompson, H. (2015): Germany and the Euro-Zone Crisis: The European Reformation of the German Banking Crisis and the Future of the Euro, New Political Economy, 20(6), 851-870.
  • Trebesch, C., and J. Zettelmeyer (2014): ECB interventions in distressed sovereign debt markets: The case of Greek bonds, .
  • Tsipras, A. (2015): We Don't Want to Go on Borrowing Forever, Spiegel Online.
There are 41 citations in total.

Details

Journal Section Makaleler
Authors

Ali Rıza Güngen

Publication Date November 30, 2016
Published in Issue Year 2016 Volume: 2 Issue: 2

Cite

APA Güngen, A. R. (2016). Whatever it takes? The European Central Bank’s Sovereign Debt Interventions in the Eurozone Crisis. Yildiz Social Science Review, 2(2), 39-52.