As a result, the balance between liability and control has been thrown out of kilter. However, such a balanced partnership between liability and control is so crucial for the functioning of EMU that it calls to mind a Frank Sinatra song called “Love and marriage”.
Financial asset prices, as you know, reflect the effects of a large number of forces at any given point in time, pulling yields in different, and often opposing, directions. To make some sense of changes in asset prices, ECB staff use an array of analytical tools, including exploiting crossasset price restrictions to identify the possible sources of economic shocks.