ECB focuses on risk management

Article sugests that the there has been a change, October 2008 in the European Central Bank’s strategy: the bank has put aside its previous inflation worries to focus on restoring financial market confidence. After globally co-ordinated interest rate cuts on the 8 October 2008, which saw its main policy rate fall by half a percentage point to 3.75 per cent, the ECB implemented sweeping changes in its money market operations that allowed it to offer banks unlimited liquidity at fixed interest rates and emergency lending at a lower penalty rate. In effect, the ECB had switched to a policy of risk management – specifically, to avoid a financial catastrophe that would wreak significant damage across the 15-country eurozone.

ECB: Press Release: Monetary policy decisions http://www.ecb.int/press/pr/date/2008/html/pr081008.en.html

ECB: Press Release, 8.10.08: hanges in tender procedure and in the standing facilities corridor http://www.ecb.int/press/pr/date/2008/html/pr081008_2.en.html

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