The ECB: What Crisis Exit Scenario(s) ?

This article examines the exit strategy, which in the ECB’s terminology is to be understood as the unwinding of the various non-standard measures decided independently of the interest rate policy stance. We study the different possible scenarios depending on whether the continuation of non-standard measures or the crisis exit coincide with the extension of an accommodative interest rate policy or a change in its stance. We show that the action of the ECB since the end of 2009 corresponds to a succession of two of these scenarios, first with the unwinding of the so-called “enhanced credit support policy” followed by a monetary policy status quo. However, the emergence of the sovereign debt crisis in the euro area forced the ECB to change tactics, with the implementation of the Securities market programme (SMP) followed, a little later, by the raising of key rates. The current situation remains tense with, on the one hand, banking systems that are still very dependent on the Eurosystem for their refinancing and, on the other, governments that are faced with difficult fiscal positions. This situation illustrates the difficult trade-off between the risk of a premature exit and that of exiting exceptional measures too late, against the backdrop of a financial crisis that has now lasted since the summer of 2007.