Klimentina POPOSKA, Elena MIHAJLOSKA, İskra STANCHEVA-GİGOV

European Central Bank -Conventional And/Or Unconventional Instruments For Monetary Policy

The mechanisms the monetary policies have failed to foresee, not to mention to prevent the 2008 Financial Crisis (FC). Moreover the burst of the crisis has challenged the market mechanism for maintaining market liquidity, financial stability and risk management. The European Central Bank (ECB) has played crucial role in the aftermath of the 2008 FC for maintaining the market liquidity. The measures taken in the post crisis period were conflicting with the basic foundations of the monetary policy of EMU, but prevented the collapse of the financial market. While the ECB has successfully controlled inflation levels and maintained market liquidity failed to spur growth as expected. The paper discusses the challenges that emerge from these policy measures and provides a recommendation for future actions. Moving away from these measures has been emphasized as one of the main challenges with exiting too early and too late being equally dangerous. The discussion continues with the analysis of the effects and implication in practice of ECB Instruments and their future utilization. The question rises whether the monetary policy should go back to the conventional instruments or maintain excess liquidity and operate the system through parallel adjustments to the deposit facility rate and the rate on the main refinancing operations.

Anahtar Kelimeler:

European Central Bank; Instruments forMonetary policy; EU; Unconventional measures; Financila Crisis

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