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Willem Hendrik Buiter - Publications
CITIGROUP PUBLICATIONS "ELA: An Emperor without Clothes?", with Ebrahim Rahbari and Juergen Michels, Citi Economics, Global Economics View, 21 January 2011. "The Debt of Nations", with Ebrahim Rahbari, Juergen Michels and Giada Giani, Citi Economics, Global Economics View, 7 January 2011.
Willem Buiter wants you to familiarise yourself with the ELA. That's the Emergency Liquidity Assistance that the eurozone's national central banks (NCBs) are able to provide their local banks under some legal fuzziness in the eurozone. The acronym has managed to grab a few headlines over in Ireland, but for the most part ELAs remains relatively unknown. Soo too, do the details of them. In theory ELAs are pretty much independent since they're not (technically) part of eurosystem operations. National central banks can offer them where and when they see fit -- as long as they follow a few basic rules. For instance, the ELA has to be consistent with the EU's Monetary Financing Prohibition. And according to ECB opinions, any ELAs extended should also be temporary, extended to illiquid institutions (not insolvent ones) and against decent collateral.
Willem Buiter wants you to familiarise yourself with the ELA.
That's the Emergency Liquidity Assistance that the eurozone's national central banks (NCBs) are able to provide their local banks under some legal fuzziness in the eurozone. The acronym has managed to grab a few headlines over in Ireland, but for the most part ELAs remains relatively unknown. Soo too, do the details of them.
In theory ELAs are pretty much independent since they're not (technically) part of eurosystem operations. National central banks can offer them where and when they see fit -- as long as they follow a few basic rules. For instance, the ELA has to be consistent with the EU's Monetary Financing Prohibition. And according to ECB opinions, any ELAs extended should also be temporary, extended to illiquid institutions (not insolvent ones) and against decent collateral.
Without further ado, we present Buiter's three-pronged solution for the Eurozone mess. In summary: EA requires i) a much larger liquidity support facility, ii) restructuring of the unsecured debt of EU zombie banks and recapitalisation of the systemically important ones among them, iii) restructuring of the debt of insolvent EA sovereigns. Digging a little deeper into his thoughts, we begin to see the controversy.
Without further ado, we present Buiter's three-pronged solution for the Eurozone mess. In summary:
EA requires i) a much larger liquidity support facility, ii) restructuring of the unsecured debt of EU zombie banks and recapitalisation of the systemically important ones among them, iii) restructuring of the debt of insolvent EA sovereigns.
Digging a little deeper into his thoughts, we begin to see the controversy.
FT Alphaville » Buiter's 2,000bn solution for the Eurozone
However, it appears to be important to the self-image of the ECB that it not be technically engaged in quantitative easing (QE), that is, the monetisation of public debt or deficits. That wish can be granted without diminishing the effectiveness of their intervention in any way, through semantic sterilisation rather than substantive sterilisation.
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