Bundesbank-government relations in Germany in the 1990s: from GEMU to EMU

The Bundesbank's widely-discussed independence ascribes it only discretionary power in the realm of monetary policy, but its influence can extend into other areas of economic policy. Since the government retains the initiative in these policy realms, the Bundesbank's influence consists of being able to mold the form rather than the direction of government policy. To exercise this influence, however, the Bundesbank must have public opinion on its side. An examination of the government-Bundesbank relationship as it touched upon the cases of Economic and Monetary Union in Germany (1990) and Europe (1990-98) reveals the extent and limitations of the Bundesbank's influence over economic policy. It concludes by exploring the consequences of these findings on the influence of the European Central Bank (ECB)

What drives spreads in the euro area government bond market?

"Spreads between euro area government bond yields are related to short-term interest rates, which are in turn related to market liquidity, to cyclical conditions, and to investors' incentives to take risk. In theory, lower interest rates are associated with lower degrees of risk aversion and smaller government bond spreads. Empirically, the Eurosystem's short-term interest rates are positively related to those spreads, which our econometric model finds to include significant and policy-relevant default risk and liquidity risk components." Copyright (c) CEPR, CES, MSH, 2009.

The evolution of monetary policy (goals and targets) in Western Europe

This chapter charts the evolution of monetary policy in the United Kingdom, France, and Germany since the late nineteenth century. It shows how the monetary authorities in the three largest European economies transitioned from the classical gold standard through the gold exchange standard and the Bretton Woods regime to European Monetary Union, while dealing with war, reconstruction, and inflation along the way. It outlines the changing goals of monetary policy and the targets, instruments, and devices deployed to achieve those goals. In doing so, it highlights the constraints within which policy makers operated under different monetary regimes

Small States and the Creation of EMU: Belgium and the Netherlands, Pace-setters and Gate-keepers

It is often argued that economic and monetary union (EMU) was created due to the efforts and interests of larger Member States. This article argues that the Belgian and Dutch contributions indicate that small countries played a significant role in the creation of EMU. Both countries wanted to create a zone of monetary stability in Europe and as such have led the process by example. However, their conceptions of monetary stability were different. Belgium, as a close ally of the Commission, played a pace-setting role, especially through creative and diplomatic proposals, whilst the Netherlands played the role of gate-keeper and important ally of the Germans. Following a framework developed by Helen Wallace, the article analyses how, and under what conditions, Belgium and the Netherlands played a role in the creation of EMU. Copyright Blackwell Publishing Ltd 2005.