Current and Future European Central Bank Monetary Policy

Keywords: ECB, Monetary Policy, NCM, Current Problems, Future Developments


This contribution examines the operations of the European Central Bank (ECB) with respect to monetary policy, along with its effects on inflation, exchange rate and financial stability. It also discusses how the regulatory role of the ECB should be improved in the future. The contribution discusses the involvement of the ECB in regulatory policy towards the financial sector, and the responses of the ECB to the financial crisis. It begins with the current set up of the European Monetary Union (EMU) along with the theoretical principles of the EMU model, and the extent to which it conforms with the theoretical framework of the New Consensus Macroeconomics (NCM) and its policy implications, namely inflation targeting. Problems with the current EMU arrangements are then discussed, followed by required ECB changes, before we finally summarize and conclude.


Download data is not yet available.


Angeriz, A. and Arestis, P. (2007), “Monetary Policy in the UK”, Cambridge Journal of Economics, 31(6), 863-884.

Angeriz, A., Arestis, P. and McCombie, J. (2008), “Does Central Bank Independence Affect Inflation Persistence and Volatility?”, CCEPP Working Paper, Cambridge Centre for Economic and Public Policy, Department of Land Economy, University of Cambridge.

Arestis, P. (2007), “What is the New Consensus in Macroeconomics?”, in P. Arestis (ed.), Is There a New Consensus in Macroeconomics, Houndmills, Basingstoke: Palgrave Macmillan, 52-87.

Arestis, P. (2009), “New Consensus Macroeconomics: A Critical Appraisal”, in Hein, E., Niechoj, T. and Stockhammer, E. (eds.), Macroeconomic Policies on Shaky Foundations – Whither Mainstream Economics? Marburg: Metropolis, 165-186.

Arestis, P. (2012), “Fiscal Policy: A Strong Macroeconomic Role”, Review of Keynesian Economics, Inaugural Issue, 1(1), 93-108.

Arestis, P. (2015), “Coordination of Fiscal with Monetary and Financial Stability Policies Can Better Cure Unemployment”, Review of Keynesian Economics, (Forthcoming).

Arestis, P. and Sawyer, M. (2003), “Reinstating Fiscal Policy”, Journal of Post Keynesian Economics, 26(1), 3-25.

Arestis, P. and Sawyer, M. (2004), “Can Monetary Policy Affect the Real Economy?, European Review of Economics and Finance, 3(3), pp. 9-32.

Arestis, P. and Sawyer, M. (2008), “Are the European Central Bank and Bank of England Macroeconomic Models Consistent with the New Consensus in Macroeconomics?” Ekonomia, Vol. 11, No. 2, pp. 51-68.

Arestis, P. and Sawyer, M. (2013), “Economic and Monetary Union Macroeconomic Policies: Current Practices and Alternatives”, Houndmills, Basingstoke: Palgrave Macmillan.

Bank of England (2005), “The Bank of England Quarterly Model”, London: Bank of England.

Bayoumi, T. and Eichengreen, B. (1998), “Exchange Rate Volatility and Intervention: Implications of the Theory of Optimum Currency Areas”, Journal of International Economics, 45, 191–209.

Begg, D., Canova, F., De Grauwe, P., Fatás, P. and Lane, P. (2002), “Surviving the Slowdown”, Monitoring the European Central Bank 4, Centre for Economic Policy Research: London.

Centre for European Policy Studies (CEPS) (2005), “EMU at Risk”, Seventh Annual Report, CEPS Macroeconomic Policy Group, Brussels: Centre for European Policy Studies.

De Grauwe, P. and Polan, M. (2005), “Is Inflation Always and Everywhere a Monetary Phenomenon?”, Scandinavian Journal of Economics, 107(2), 239-259.

Draghi, M. (2014), “Unemployment in the Euro Area”, Speech at the Annual Central Bank Symposium in Jackson Hole, 22 August. Available at:

Estrella, A. and Mishkin, F. (1997), “Is There a Role for Money in Monetary Policy?”, Journal of Monetary Economics, 40(2), 279-304.

European Central Bank (ECB) (2004), “The Monetary Policy of the ECB”, Frankfurt: Germany.

European Central Bank (ECB) (2008), “European Central Bank: The First Ten Years, 1998-2009”, Monthly Bulletin 10th Anniversary of the ECB, Frankfurt: Germany.

Galí, J. and Gertler, M. (2007), “Macroeconomic Modelling for Monetary Policy Evaluation”, Journal of Economic Perspectives, 21(4), 25-45.

Goodhart, C.A.E. (2007), “Whatever Became of the Monetary Aggregates?”, The Peston Lecture delivered in honour of Maurice, Lord Peston, Queen Mary, University of London, February 28.

Goodhart, C.A.E. (2009), “The Continuing Muddles of Monetary Theory: A Steadfast Refusal to Face Facts”, in E. Hein, T. Niechoj and E. Stockhammer (eds.), Macroeconomic Policies on Shaky Foundations – Whither Mainstream Economics? Metropolis – Verlag: Marburg, Germany.

Issing, O. (2003), “Evaluation of the ECB’s Monetary Policy Strategy”, ECB Press Conference and Press Seminar, 8 May, Frankfurt: Germany.

Meyer, L.H. (2001), “Does Money Matter?”, Federal Reserve Bank of St. Louis Review, 83(5), 1-15.

Mundell, R.A. (1961), “A Theory of Optimal Currency Areas”, American Economic Review,53 (1) pp. 657-664.

Vieira, C. and Vieira, I. (2012), “Assessing the Endogeneity of OCA Conditions in EMU”, Manchester School, 10(5), 77-91.

Winkler, A. (2014), “The Lender of Last Resort in Court”, Working Paper Series No. 207, Frankfurt: Frankfurt School of Finance and Management.

Woodford, M. (2006), “Is Money Important for Monetary Policy?”, Paper presented at the 4th ECB Central Banking Conference, 10-1 November, Frankfurt: Germany.

How to Cite
Arestis, P. (2015). Current and Future European Central Bank Monetary Policy. Brazilian Keynesian Review, 1(1), 4-17.