Short-term interest rates on loans to households and businesses have declined. The pass-through of the ECB interest rates to the economy has proceeded in accordance with past regularities. How does this policy course of enhanced credit support compare with the approaches of some other central banks grappling with tumult in financial markets?
Since mid-September 2008 the Federal Reserve has pursued a policy of direct “credit easing”. These measures are targeted at directly addressing instability or declining credit availability in critical non-bank channels of intermediation. The euro area and the United States have significantly different financial structures. While the United States has a primarily market-based financial system, the euro area is largely bank-centred.