0 Lessons from the Crisis Jean-Claude Trichet President of the European Central Bank University of...
9
1 Lessons from the Crisis Jean-Claude Trichet President of the European Central Bank University of Venice, Venice, 9 October 2009
-
Upload
jody-marsh -
Category
Documents
-
view
212 -
download
0
Transcript of 0 Lessons from the Crisis Jean-Claude Trichet President of the European Central Bank University of...
1
Lessons from the Crisis
Jean-Claude Trichet
President of the European Central Bank
University of Venice, Venice, 9 October 2009
2
Interbank market spreads
Note: Spreads are the difference between 12-month Euribor/Libor and Overnight Index Swap rates, in basis points.
Source: Bloomberg and ECB’s calculations.
0
50
100
150
200
250
300
350
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09
0
50
100
150
200
250
300
350
EUR GBP USD
August 2007:
Beginning of
the Turmoil
3
Interbank market spreads
Note: Spreads are the difference between 12-month Euribor/Libor and Overnight Index Swap rates, in basis points.
Source: Bloomberg and ECB’s calculations.
0
50
100
150
200
250
300
350
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09
0
50
100
150
200
250
300
350
EUR GBP USD
August 2007:
Beginning of
the Turmoil
September 2008:
Intensification
of the Turmoil
4
-6 -5.5 -5 -4.5 -4 -3.5 -3 -2.5 -2 -1.5 -1 -0.5 0 0.5 10
0.5
1
1.5
2
2.5
GDP annual growth rate
V
alue
of d
ensity
func
tion
Forecast from Jan 09
Forecast from Mar 09
Forecast from May 09
Forecast from July 09
Forecast from August 09
Forecast from September 09
Jul09-4.5
Sep09 -3.9
May09 -3.8
Mar09 -2.5
Aug09-4.3
Jan09 -1.5
The economic freefallDistribution of Euro Zone Barometer 2009 GDP forecasts
Source: Eurozone Barometer and ECB calculations. Last observation: September 2009
5
Interbank market spreads
Note: Spreads are the difference between 12-month Euribor/Libor and Overnight Index Swap rates, in basis points.
Source: Bloomberg and ECB’s calculations. Last observation: 2 October 2009
0
50
100
150
200
250
300
350
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09
0
50
100
150
200
250
300
350
EUR GBP USD
August 2007:
Beginning of
the Turmoil
September 2008:
Intensification
of the Turmoil
6
The ECB’s enhanced credit support
Fixed-rate full-allotment
Expansion of collateral
Longer-term liquidity provision
Liquidity provision in foreign currencies
Financial market support through purchases of covered bonds
Set of primarily bank-based measures to enhance the
flow of credit beyond the standard interest rate channel
7
The exit strategy
Four cornerstones:
1. Monetary policy strategy shapes the exit
2. Design of enhanced credit support facilitates exit
3. Ability to act: independence and technical capability
4. Credible alertness: reputation to act when appropriate
8
Anchoring of inflation expectations: euro area
Note: Data in percent; Last observation 5 Oct 2009
Source: Reuters, ECB Calculations.
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09
5-year BEIR10-year BEIR5-year forward 5 years ahead BEIR
9
Lessons from the Crisis
Jean-Claude Trichet
President of the European Central Bank
University of Venice, Venice, 9 October 2009
