Tag: TPI

The ECB’s Transmission Protection Instrument: A Legal & Economic Analysis

The Sovereign Debt Forum together with the London Financial Regulation Seminar

On Monday 31 October 2022, the Sovereign Debt Forum (a joint initiative of Georgetown IIEL and QMUL CCLS) together with the London Financial Regulation Seminar held a roundtable discussion on the ECB’s Transmission Protection Instrument (TPI).

The TPI was announced by the ECB on 21 July 2022 and is conceived as an anti-fragmentation tool in sovereign debt markets with the aim to support the effective transmission of monetary policy. The controversy surrounding this yet-to-be-activated instrument, in the light of rising inflation in the eurozone, is debated by a panel moderated by Professor Rosa Lastra (CCLS).

Panelists:

Lee Buchheit – Visiting Professor of CCLS/QMUL and of the University of Edinburgh

Daniel Gros – Director of the Centre for European Policy Studies, CEPS, Brussels

Ignazio Angeloni – European University Institute (EUI) and SAFE (Goethe University Frankfurt)

Luis Garicano – Visiting Professor of Economics, Columbia Business School

Sara Dietz – Ludwig-Maximilians-Universität München (LMU)

The TPI: protecting the transmission mechanism or managing spreads?

Prepared for the European Parliament Economic and Financial Affairs Committee –
Ignazio ANGELONI, EUI –
Daniel GROS, CEPS –
Farzaneh SHAMSFAKHR, CEPS

Prepared for the European Parliament Economic and Financial Affairs Committee

IN-DEPTH ANALYSIS
Requested by the ECON Committee
Monetary Dialogue Papers, September 2022

Abstract
The European Central Bank has announced a new facility, the Transmission Protection Instrument (TPI), to safeguard the monetary policy transmission mechanism (MTM). The euro area is more robust and resilient today than in past eurocrises. The TPI should therefore focus on short-term instruments in which threats for the MTM may reside. The recent increase in Italian long-term spreads did not signal such threat. The ECB should create a Transmission Observatory, with data and analyses on the pass-through from the money market to bank credit conditions, to detect possible threats to the MTM and document the possible need for intervention.

Available here >>