In January 2023, SUERF published a paper written by Mary Pietserse-Bloem, Professor of Financial Markets at Erasmus School of Economics and co-author Sylvester Eijffinger, Emeritus Professor of Monetary Economics. Their paper addresses the effect of different ECB Policy Regimes.
Research
The Professors, concluded with their study of European Central Bank (ECB) policies that the last two ECB presidents have pursued policies that have pushed the boundaries of what the ECB does as a central banker. Namely, they started buying sovereign debt, effectively keeping interest rates between euro countries relatively close together. Hence the ECB has started acting more and more in the capital market rather than only the money market.
Negative interest rates
Pieterse-Bloem and Eijffinger concluded that negative interest rates had no effect on interest rates between countries for borrowing money in the capital market. This is because the negative interest rate applied to short-term borrowing, while countries mainly borrow money for the long term.
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For the whole paper, published by SUERF (January 2023), click here.