Anti-fragmentation: new tool in the toolkit

Abstract:

With the rise in interest rates and the phasing out of ECB’s asset purchase programmes, highly indebted countries such as Italy and Greece are facing a sharper rise in their bond yields than Germany – a development often referred to as `bond market fragmentation'. In response, the Governing Council of the European Central Bank announced the Transmission Protection Instrument on 21 July 2022. This paper provides a legal and economic examination of this new monetary policy instrument. It is compared with other non-conventional instruments in the context of the Treaty framework and the doctrine of the European Court of Justice.

Table of Contents:

• The ECB’s Transmission Protection Instrument: a legal & economic analysis | Kerstin Bernoth, Sara Dietz, Gökhan Ider & Rosa Lastr
• The TPI: a useful step, just a step | Charles Wyplosz
• The TPI: protecting the transmission mechanism or managing spreads? | Ignazio Angeloni, Daniel Gros & Farzaneh Shamsfakhr
• Anti-fragmentation: an incomplete diagnosis and wrong solution | Marek Dabrowski

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