The latest thinking of European macroeconomists

Monetary Policy and Inequality

Summary

The majority of the CfM panel of experts on the UK economy thinks monetary policy has only a small impact on wealth and income inequality. A larger majority of nearly 90% of the panel believes that inequality should play a minimal role or no role in the Bank of England’s monetary policy decisions.

Background

Central Bank Digital Currency for the UK

Summary

The CfM panel of experts on the UK economy is nearly unanimous in agreeing that a Bank of England-issued digital currency would benefit the British economy. Half of the panel also believes that a digital currency would have limited impact on the UK banking system.

Background

The June 2021 CfM survey asked the members of its UK panel to assess the benefits of a Central Bank Digital Currency (CBDC) to the UK economy and its potential risks to the UK banking sector. 

Central Bank Digital Currencies

Fiscal Rules in the European Monetary Union

Summary

The CfM-CEPR panel of experts on the European economy are nearly unanimous that existing EU rules require revision. Many panel members would opt for some package of fiscal councils; more flexible, countercyclical, or expenditure-based rules; and increased fiscal capacity at the EU level. A smaller share of panelists would scrap fiscal rules altogether, leave fiscal policy to national authorities, and provide greater clarity that the EU wouldn’t bail out countries facing debt problems. A single member called for stricter rules with greater enforcement.

Asset Prices and Monetary Policy

Summary

A majority of the CfM panel of experts on the UK economy believe that financial stability should be addressed with macroprudential tools and left out of monetary policy decisions. A larger majority opposes changing the Bank of England’s remit to target asset prices.

Background

The April 2021 CfM survey asked the members of its UK panel of experts what role the Bank of England should play in targeting asset prices and addressing financial imbalances.