In this study, Jörg Bibow, Professor of Economics at Skidmore College, assesses the ECB’s crisis management performance and potential for crisis resolution. Part of AICGS’ focus on analysis of the euro crisis, the study investigates the institutional and functional constraints that delineate the ECB’s scope for policy action under crisis conditions and how the ECB has actually used its leeway since 2007; or might do so in the future. The study finds that the ECB may well stand out positively when compared to other important euro or national authorities involved in managing the euro crisis but that, in general, the bank did “too little, too late” to prevent the euro area from slipping into recession and protracted stagnation, ending up in its current predicament. Dr. Bibow also finds that expectations regarding the ECB’s latest policy initiatives may be excessively optimistic and that proposals featuring the ECB as the euro’s savior through even more radical employment of its balance sheet are misplaced hopes. Ultimately the euro’s travails can only be ended and the euro crisis resolved by shifting the emphasis toward fiscal policy, by partnering up the ECB with a “Euro Treasury” as a vehicle for the central funding of public investment through common euro treasury debt securities in particular.

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Dr. Jörg Bibow is a professor of economics at Skidmore College, New York, a research associate at the Levy Economics Institute, New York, and a member of the Bretton Woods Committee, Washington, DC. Previously he held lecturing positions at the University of Cambridge, U.K.; Hamburg University, Germany; and at Franklin University Switzerland. He was awarded his Ph.D. by the University of Cambridge, U.K.