Central Banking, Monetary Policy, and the European Central Bank: Coping with the Challenges(The Elgar Series on Central Banking and Monetary Policy)

This book sheds light on the incoming challenges facing the European Central Bank (ECB) through a post-Keynesian lens. With contributions from expert global scholars and practitioners, it provides novel perspectives on the monetary and financial theory underlying the conduct of the ECB. Divided into three main parts, chapters cover the theoretical foundations of central banking theory, the threats of climate change and its impact on monetary policy, and the roles of public banks and the interbank market. They critically analyze the ECB’s focus on price stability as well as its inflation-targeting regime, before considering whether its independence and mandate should be reviewed in light of current climate realities. The book draws on quantitative data to examine the interactions between carbon emissions, output, and green and brown systems, and concludes by evaluating the possibility of reforming the TARGET2 system to convert the ECB into an international settlement institution. Presenting cutting-edge insights and innovative solutions to the imminent challenges confronting the ECB, this book is an essential resource for students and scholars of economics, political economy, and money and banking. Its investigation of current and future policy issues will also greatly benefit practitioners and policymakers in these fields.

Table of Contents:
Contents Preface xiv PART I Theoretical issues 1 Is the ECB well-equipped to deal with upcoming financial instability and crises? 2 Lino Sau, Emanuele Citera and Domenica Tropeano 2 Inflation is not a monetary phenomenon: A critical analysis of the theoretical model that inspires the European Central Bank 20 Giancarlo Bertocco and Andrea Kalajzić 3 Liquidity and solvency of national government in the Eurozone and the role of the ECB 57 Klaus Diekmann, Dirk Ehnts and Leon Heckmann PART II Climate change and monetary policy 4 Climate change, carbon prices, and the role of the ECB’s monetary policy 79 Olimpia Fontana 5 Economic policy and climate change: Current practices and challenges for the ECB 100 Ettore Gallo and João Paulo Braga 6 After the crises and in front of climate change: Should the independence and mandate of the ECB be reviewed? 121 Etienne Farvaque PART III Banking and interbank market 7 Transforming the European Central Bank into an international settlement institution: The Keynes Plan revisited 136 Sergio Rossi 8 The limits of mainstream monetary policy and a proposal for public banks 150 Riccardo Zolea 9 A rollover-based source of the European fragmentation 167 Jessica Reale

About the Author :
Edited by Emanuele Citera, Assistant Professor of Economics, Division of Social Studies, Bard College, USA, Lino Sau, Associate Professor of Political Economy, Department of Economics and Statistics “Cognetti de Martiis”, University of Turin and Domenica Tropeano, Associate Professor of Political Economy, Department of Economics and Law, University of Macerata, Italy

Review :
‘The ECB has long been criticized for institutionalizing supply-side macroeconomics, a limited perspective on inflation drivers, and a ‘fair weather’ view of the relationship between monetary union and fiscal policy. It now faces new challenges in the form of the climate crisis and potential disruptions to the payments system. Central Banking, Monetary Policy, and the European Central Bank addresses these issues in a series of thoughtful and constructive essays that, together, offer hope for a brighter future for Europe at a critical moment in its history.’ ‘This is a highly useful and interesting collection of papers providing thought-provoking perspectives for anyone interested in monetary policy especially for the Eurozone and how central bankers’ actions at a time of financial innovation, price instability, financial crises and economic growth challenges do or —do not —work.’