The ECB’s Unfinished Business: Challenges ahead for EMU Monetary and Fiscal Policy Architecture

Abstract

Under Mario Draghi’s Presidency, the range of measures and tools of the ECB expanded significantly, both by enhancing transparency and in the direction of stretching the ECB’s competences beyond the limits to the existing monetary framework. Notwithstanding these achievements, significant challenges remain. In this note, we assess the potential limits to the amount of ECB’s easing available for the future, including credit and political considerations. We argue that monetary policy stimulus alone may not resolve the situation of having the euro area stuck in a slowing growth environment, and ask whether the next President may want to pass the ball more strongly to national governments.