Monetary Policy In The Context Of The European Sovereign Debts

Abstract

The crisis of the sovereign debts in Europe challenged the monetary policy of the European Central Bank (ECB) to maintain price stability and to encourage the credits for economic activities under the conditions of a rather uncertain environment with precautious investors and under the conditions of faltering fiscal sustainability of the Euro Area member states. The paper approaches the issue of the monetary effects generated by the crisis of the sovereign debts within the Eurozone starting with a brief description of the European sovereign bonds market, starting with the period before the euro project implementing. The particularities of the monetary transmission mechanism caused by the effects of the sovereign bonds crisis reveal specific constraints of the current monetary policy. The article is subject to the complex issues related to the monetary integration process and the operation of the optimum currency areas.

Keywords

• price stability
• monetary transmission mechanism
• sovereign bonds