Reports

The new Executive Board of the European Central Bank has shown remarkable unity under President Christine Lagarde’s leadership, even during the bitter trials of the 2020 pandemic. However, the team will face challenges. With respected economists working for her, the president – a lawyer and politician – could find herself ...

Even before Covid-19 struck, many governments had dangerously high debt levels. Now that they have been given a new excuse to spend, the public sector is becoming even more bloated. Such a strategy will prove unsustainable in the long run, and inflation will inevitably appear. But meanwhile, states keep on ...

As the pandemic-induced crisis pushed the U.S. national savings rate into negative territory, the country has become even more dependent on capital inflows from abroad to  meet its investment needs. And as investors from China are no longer welcome on American shores, where will all that money come from? 

Though a quick injection of funds was necessary to keep businesses running and to avoid suffering, governments have taken the crisis brought on by Covid-19 as an opportunity to further increase their grip on economies. The enormous amounts of spending are financed through money creation. The result of such processes ...

Governments have responded to the pandemic by implementing safety-net programs to support businesses and workers during lockdowns, leading to elevated deficits and rising debt levels. Many states will soon need to face the aftermath of these decisions, but not all fiscal responses are created equal. Countries that favor spending cuts ...

The Covid-19 pandemic has capped a decade of economic crises that the European Central Bank has had to deal with. The bank’s tools to keep countries’ finances afloat and investors’ confidence solid have been unprecedented. Weaning them off low interest rates, financial injections and high debt will be its next ...

Europe is responding to the Covid-19 crisis with gigantic spending programs meant to shore up struggling economies. While financial support makes sense, the EU's history of doling out funds shows these initiatives often lead to fraud, corruption and market distortion. Recent reforms may not be enough to prevent a repeat ...

Many forecast that 2021 will be characterized by vigorous growth and that, by the end of the coming year, the world economy will have recovered from the 2020 losses. The author takes a more discriminating view and argues that only a few countries, China among them, will be back on ...

As parts of the U.S. government wrangle over another round of Covid-19 relief, one of the thorniest issues is whether to offer more aid to states and local governments. What has become clear, however, is that the funds already doled out should have easily covered the shortfalls in tax revenue ...

At the pandemic’s onset, few paid any attention to exchange rates. The U.S. dollar has weakened significantly since March 2020, surprising many observers. Some of the drop can be ascribed to the diminished international trade flows, which cut the demand for the globe’s leading exchange currency. There may also be, ...

Many have hailed the EU’s July decision to partially mutualize its newly issued debt as a “historic step.” Massive as it is, the stimulus package is unlikely to fix Europe’s fragile and crisis-stricken economies, even if the Union’s show of unity has already firmed it politically. However, the change in ...

Once a staunch defender of financial responsibility in the eurozone, Germany has thrown its support behind the European Commission’s ill-conceived, unwarranted and politicized spending scheme to aid the eurozone’s economy.

Six months into 2020, the effects of the Covid-19 crisis on the global economy are becoming clear. Not only has it disrupted supply chains and upended long-standing industry alliances, it has reinforced governments’ spendthrift habits and central banks’ tendency to print money. GIS experts have offered their analysis and predictions ...

In late March, Mario Draghi broke his post-ECB silence with an article in the Financial Times that set out several recipes for how to address the economic difficulties brought on by measures to contain the COVID-19 pandemic. Essentially calling for a “whatever it takes” part two, he urged central banks ...

Germany’s Federal Constitutional Court in Karlsruhe made history on May 5, 2020. The justices found that the European Central Bank could have acted outside its remit by purchasing government debt. Accordingly, the court suspended the Bundesbank’s participation in the ECB’s program.

When governments and critical financial institutions rig the system to facilitate irresponsible public spending, trouble is inevitable. Today’s crony socialism, masquerading as capitalism, is at the root of the crisis unleashed by the anti-coronavirus measures. Unfortunately, panicked citizens perceive the government as a part of the solution, not the problem.

Pumping still more liquidity into Europe’s pandemic-frozen economy hardly addresses underlying problems, but this happens to be the most politically palatable strategy that Brussels could pursue. How EU leaders go about financing the massive new outlays, however, is a tricky question. The most likely borrowing scheme will have long-term consequences ...

As the coronavirus pandemic freezes large swaths of the economy, the world’s three most important central banks find themselves under tremendous political pressure to flood the markets with easy money again. Their approaches may prove significantly different. 

The COVID-19 pandemic is dealing body blows to the world economy, but it is not the root cause of concerns about Europe’s future. Brussels’ and Frankfurt’s stock responses to the impending crisis – money printing, easy credit and massive public expenditure – only bring Europe closer to socialist-style centralization.

Public debt levels are at an all-time high – in Europe the problem is particularly acute. The lessons from the Greek debt crisis seem not to have been learned, as Italy alone carries debt that is three times larger than the European Union’s emergency fund. Some economists now argue such ...

When Sabine Lautenschlaeger became the fourth representative of Germany on the ECB governing bodies to resign on former President Mario Draghi’s watch, the issues of his legacy and the collegiality in the EU’s central bank have come to the fore. Growing doubts over the bank’s stimulus policies combined with ignoring ...

The launch of a Sovereign Bond-Backed Security (SBBS) is advocated by EU leaders as the best way to overcome the flaws inherent in the monetary union, which became notably obvious after the euro debt crisis of 2009. The SBBS is supposed to offer European investors new reliable stores of value, ...

Unconventional monetary policies saved many financial institutions in the U.S. and Europe after the financial crisis. However, near-zero to negative interest rates and central banks’ massive debt-purchasing programs, which pumped trillions of dollars and euros into economies, failed to restore growth and have had potent, negative and lasting side-effects. Relaxing ...

Two legal challenges to the EU central bank’s most controversial policies have been working their way through Germany’s Federal Court of Justice, the country’s supreme court equivalent. In one of the cases, the justices in Karlsruhe already ruled that the authority of the EU Banking Union ought to be limited. ...