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Abstract

The financial crisis which began in the U.S. in 2007 influenced all economies on a global scale following

the collapse of Lehman Brothers in September 2008. As a response to the crisis, central banks

started to implement non-standard monetary policy tools as well as short-term interest rates also

known as standard policy tools in order to help monetary policy transmission channels work effectively.

The European Central Bank (ECB) implemented non-standard monetary policies as in addition

to the standard policy tools during this period. The non-standard monetary policies introduced

by the ECB were different from those implemented by other central banks (Fed, Bank of England) in

terms of implementation and results. Firstly, the policies of the ECB were not specific to one single

country. Secondly, the banking system was the major source of finance in Europe, which had an impact

on the policies. In this regard, the ECB introduced a policy of enhanced credit support consisting

of five main elements in order to maintain price stability over the medium term following the crisis.

By 2010, public debt in some member countries of the European Union reached high levels, requiring

them to take additional measures. The Securities Markets Programme was introduced to that end.

Initially focusing on the debt securities of Greece, Ireland, and Portugal, the Securities Markets Programme

was expanded in August 2011 to cover the debt securities of Italy and Spain. In addition, two

Long-term Refinancing Operations (LTROs) were introduced. This article presents a descriptive analysis

of the non-standard monetary policy tools introduced by the ECB following the financial crisis.

However, the monetary policy implemented in the Euro zone is not specific to one single country, and

every country has a different financial structure, both of which limit the effectiveness of the policies

implemented. The changing structure of the monetary policy implemented in the aftermath of the crisis

aims to help the transmission channel work effectively. This depends on countries’ having a strong

budget and financial structure as well as an effective monetary policy. Therefore, general economic

factors may have complicated impacts on shaping the expected results of the policies when there are

various implementations of monetary policies.