Artikel
Activation of new ECB emergency program TPI not required so far
Since the beginning of 2022, monetary policy in the euro area has been gradually normalizing. As a result, bond yields of highly indebted countries such as Italy and Greece are rising more sharply than those of countries with less debt, such as Germany, a development referred to as bond market fragmentation. To ensure the coherent effectiveness of monetary policy on economic developments and, ultimately, price developments in all euro area Member States, the Governing Council of the European Central Bank announced the Transmission Protection Instrument (TPI) in July 2022. The TPI intends to make it possible to selectively purchase government bonds from countries whose interest rate increases are not considered to be justified by macroeconomic fundamentals, thus preventing a disorderly divergence in interest rate levels between countries. This Weekly Report analyzes the economic and legal aspects of this new monetary policy instrument. Estimates from the empirical model show that current yield spreads between government bonds of euro area member states cannot yet be justified as disorderly; rising yields can be explained by a worsening of macroeconomic fundamentals and stricter general risk assessments. Therefore, the requirements for activating the TPI have not yet been fulfilled. In addition, TPI raises concerns from a legal perspective.
- Language
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Englisch
- Bibliographic citation
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Journal: DIW Weekly Report ; ISSN: 2568-7697 ; Volume: 12 ; Year: 2022 ; Issue: 40 ; Pages: 249-256 ; Berlin: Deutsches Institut für Wirtschaftsforschung (DIW)
- Classification
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Wirtschaft
Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
Interest Rates: Determination, Term Structure, and Effects
Monetary Policy
Central Banks and Their Policies
Regulation and Business Law: General
- Subject
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monetary policy transmission
asset purchase programmes
sovereign bond yield spreads
bond market fragmentation
Transmission Protection Instrument
bond market fragmentation
- Event
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Geistige Schöpfung
- (who)
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Bernoth, Kerstin
Dietz, Sara
Ider, Gökhan
Lastra, Rosa M.
- Event
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Veröffentlichung
- (who)
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Deutsches Institut für Wirtschaftsforschung (DIW)
- (where)
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Berlin
- (when)
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2022
- DOI
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doi:10.18723/diw_dwr:2022-40-1
- Handle
- Last update
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10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Artikel
Associated
- Bernoth, Kerstin
- Dietz, Sara
- Ider, Gökhan
- Lastra, Rosa M.
- Deutsches Institut für Wirtschaftsforschung (DIW)
Time of origin
- 2022
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ECB asset purchases may affect wealth distribution
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"Das Anleihekaufprogramm der EZB dürfte die Vermögensungleichverteilung zunächst verstärken": Acht Fragen an Kerstin Bernoth
"Wir sehen die Gefahr, dass sich die EZB politischem Druck aussetzt"
Monetary policy and mispricing in stock markets