European Union and Monetary Union in Permanent Crisis I: An Inventory

Description

European integration efforts are on the brink of collapse. In its current state, the European Monetary Union is unintentionally acting more as a dis-integration factor than as a unifying element. Dirk Meyer provides descriptions, analyses and background information on the current crisis. The book is the result of more than ten years of work on the subject. Preface and Acknowledgments Contents About the Author List of Abbreviations List of Figures 1 Introduction Part I Does European Integration Fail—Despite or Because of the Alternatives? 2 The Politics of Inevitability: How It Came About and Why a Change Is Advised 2.1 High Error Costs through Inevitability 2.2 Loss of Democracy and Legal Uncertainties 2.3 Summary References 3 The Refugee and Euro Crises: Similarities and Differences in Political Handling 3.1 Obvious Similarities 3.2 Different Problem-solving Strategies 3.3 Explanatory Approaches for Different Handling 3.4 De Facto Breach of EU Law in Both Cases 3.5 The Rule of Law, Democracy and the Separation of Powers 3.5.1 The Rule of Law 3.5.2 Democracy 3.5.3 Shift in the Division of Power 3.6 Loss of the Ability to Err 3.7 Summary References Part II The crisis policy and its consequences 4 Low Interest Rates: Consequences and Dangers 4.1 The Facts: Negative Real Interest Rate 4.2 Effects of a Low Interest Rate 4.2.1 Real Asset Depletion – Declining Future Provision 4.2.2 Tax Enforcement Interest 6% 4.2.3 Investment Shortage 4.2.4 Debt Trap of Low Interest Rates 4.2.5 Risks to Financial Market Stability 4.2.6 Socialization of ECB Losses 4.2.7 Uncertainties in Occupational Pensions 4.2.8 Low Interest Rates Weaken Insurances 4.3 Need for Action? 4.4 Summary References 5 Equalization of Risk Premiums through the ECB 5.1 Policy of Equalizing Risk Premiums 5.2 How Effective is this Policy? 5.3 Misdevelopments 5.4 Political Conclusions 5.5 Summary References 6 Negative Returns on Corporate Bonds: How the ECB Renders the Interest Rate Steering Function of the Capital Market Ineffective 6.1 Money for Nothing 6.2 Purchase of Corporate Bonds: A last-ditch Effort? 6.3 The Economic Steering Function of the Bond Interest Rate … 6.4 … Leads to Misallocation with Negative Capital Market Interest Rates 6.5 Further Consequences and Implications 6.6 Summary References 7 Will There Soon Be a Euro Parallel Currency?—On the Proposal for a Tax on Cash 7.1 Psychological Preparation for Negative Savings Rates or Serious Proposal? 7.2 Euro-Parallel Currency to Decouple Cash and Sight Deposits 7.3 Analysis and Criticism 7.4 Summary References 8 The New Money Laundering Act: Another Attempt at Cash Restrictions 8.1 Stronger Regulation of Cash Transactions 8.2 Strengthening the Risk-based Approach of Money Laundering Law 8.3 Organizational and Institutional Innovations 8.4 Do Stricter Regulations of Money Transfers Lead to Less Crime? 8.5 Summary References 9 Italian Bank Rescue: EU Resolution Directive and an “Italian Way” 9.1 Italian Banking Crisis 2016 9.2 Ways of Bank Restructuring and Liquidation 9.2.1 Single Resolution Mechanism (SRM) 9.2.2 Continued Pooling of Aid and Liability 9.3 Alternative Solutions to Italian Bank Rescue 9.3.1 The Italian Way of a Pooling of Aid and Liability 9.3.2 Future “creative” Possibilities for Bank Rescue 9.4 Assessment of the “Italian way” to Bank Rescue 9.5 Summary References 10 Debt Relief for Greece: An Overview of Previous Reliefs 10.1 On the Debt Situation 10.2 The Debt Relief Between 2012 and 2017 10.2.1 Debt Haircut of Private Creditors in March 2012 10.2.2 Debt Haircut for Public Creditors (EFSF and Bilateral Loans) in November 2012 10.2.3 Structural Advantages of an EFSF/ESM Credit 10.2.4 Further Credit Easing by the EFSF/ESM from January 2017 10.3 Eurogroup Agreements on Further Debt Relief 2018 10.4 Estimation of the Total Benefit Between 2012 and 2017 10.5 Summary References Part III Monetary Policy: ANFA, ELA, TARGET2, PSPP and PEPP—Euro Money Creation by the Member States Nationalized Monetary Policy: ANFA, ELA, TARGET2, PSPP and PEPP—Euro Money Creation by the Member States 11 ANFA: Euro Money Creation by the Member States 11.1 Emergency Liquidity Assistance (ELA) 11.2 Agreement on Net Financial Assets (ANFA) 11.3 TARGET2 balances 11.4 ELA, ANFA and TARGET2 Balances Compared 11.5 Actions 11.6 Summary References 12 PSPP Bond Purchases as National Additional Money with Monetary Policy Relevance: A Reinterpretation of the ANFA Holdings in the Light of Recent Events 12.1 Reassessment of PSPP Purchases: Fiscal and Economic Policy Instead of Monetary Policy 12.2 PSPP Purchases as NFA: National Additional Money with Monetary Policy Relevance 12.3 Summary References 13 The PSPP Government Bond Programme: Empirical Data and Rulebook Call the BVerfG Judgment Partly into Question 13.1 Subject of the Investigation and Course of the Legal Dispute 13.2 On the Proportionality of the PSPP Programme 13.3 Do the Criteria for the Prohibition of Monetary State Financing Hold? 13.3.1 Compliance with Purchase Limits 13.3.2 Compliance with the ECB Capital Key 13.4 Loss Sharing 13.5 Outlook on the Pandemic Emergency Purchase Programme 13.5.1 Analysis of the PEPP Programme for the Prohibition of Monetary State Financing 13.5.2 A Crisis Scenario for Greece, Italy and the EU 13.6 The PSPP (and PEPP) as a Crisis Instrument for State Credit Access: What Happens in the Event of Unwinding? 13.7 Summary References 14 The TARGET2 System: Solutions from a Dead End 14.1 The TARGET Default Risk Creates a Blackmail Potential 14.2 Solutions without Reform of the TARGET Regulations? 14.3 Repatriation of TARGET2 Balances through Central Bank Bonds 14.4 Proposals for a TARGET Reform 14.4.1 Periodic Return of TARGET Credits to a Payment-Related Normal State 14.4.2 Capital Controls and Restrictions on Intraday TARGET Balances 14.5 Summary References Index