The Monetary Pillar And The Great Financial Crisis

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Executive Summary

Since its inception, a most distinctive (and controversial) feature of the ECB monetary policy strategy has been its emphasis on money and monetary analysis, which constitute the basis of the so-called monetary pillar. The present paper examines the performance of the monetary pillar around the recent financial crisis episode, and discusses its prospects in light of the renewed emphasis on financial stability and the need for enhanced macro-prudential policies. The Great Financial Crisis that has swept the global economy since mid-2007 and whose strong ripples are still being felt, has posed serious challenges for central banks. The European Central Bank (ECB) has been no exception.

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