ECB Officials See No Cause for Alarm Over France’s Market Turmoil - TPI
While the ECB has long been used to turmoil because of its experience of the sovereign debt crisis of the previous decade, its need for emergency action has become rarer.
In June 2022, policymakers were very fast to act on Italy’s bond crisis.
Within days, President Christine Lagarde had convened an crisis meeting that she conducted from the basement of a London hotel to secure the agreement on a new crisis tool aimed at preventing fragmentation in the euro zone — the so-called Transmission Protection Instrument, TPI.
The creation of that instrument and the existence of others may be one element of reassurance that allows policymakers to stay sanguine and keep watching from the sidelines.
Executive Board member Isabel Schnabel, who is in charge of market operations at the ECB, said in a speech about fiscal and monetary policy in early June — before the EU election and Macron’s shock announcement — that TPI “is only used in countries that pursue sound and sustainable fiscal and macroeconomic policies.”
She highlighted that the central bank “cannot counter persistent tensions that are due to country fundamentals” with the instrument.
Bloomberg 14 June 2024
Transmission Protection Instrument (TPI)
https://englundmacro.blogspot.com/2022/07/transmission-protection-instrument-tpi.html
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