THE FINANCIAL CRISIS RESPONSE. COMPARATIVE ANALYSIS BETWEEN EUROPEAN UNION AND USA

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By: FLORENTINA MELNIC
Keywords: financial crisis, unconventional monetary policy, TARP, refinancing operations

 This paper reviews the measures adopted by central banks from the most important economies during the crisis and assess their effectiveness. It is important for policy makers to identify which measures were effective in limiting the financial system distress in order to adopt the appropiate measure during future crisis. In case of US, TARP was the most important program for banking system and it was effective in reducing banks’ contribution to systemic risk and banks’ default probabilities. But TARP also conducted to a reduction in loans growth and create incentives for higher risk-taking behavior. The unconventional monetary policies adopted by ECB during the period 2008- 2016 reduced the impact of the crisis on the European economy and achieved their objectives: to support banks’ funding and to increase lending to real economy (LTROs), to calm tensions from bond markets (CBPP, SMP, OMT), to support economic activity and to stabilize inflation rate (SMP, OMT, LTROs, APP).