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Wim Duisenberg, first President of the ECB. The European Central Bank is the de facto successor of the European Monetary Institute (EMI). [7] The EMI was established at the start of the second stage of the EU's Economic and Monetary Union (EMU) to handle the transitional issues of states adopting the euro and prepare for the creation of the ECB and European System of Central Banks (ESCB). [7]
On 22 December 2011, the ECB [311] started the biggest infusion of credit into the European banking system in the euro's 13-year history. Under its Long Term Refinancing Operations (LTROs) it loaned €489 billion to 523 banks for an exceptionally long period of three years at a rate of just one per cent. [ 312 ]
Criterion potentially fulfilled: If the budget deficit exceeds the 3% limit, but is "close" to this value (the European Commission has deemed 3.5% to be close by in the past), [44] then the criteria can still potentially be fulfilled if either the deficits in the previous two years are significantly declining towards the 3% limit, or if the ...
The ECB's monitoring regime includes conducting stress tests on financial institutions. [34] If problems are found, the ECB will have the ability to conduct early intervention in the bank to rectify the situation, such as by setting capital or risk limits or by requiring changes in management.
As required by EU law and as part of the SREP, the ECB carries out annual stress tests on supervised banks. [21] In 2016, a stress test was performed on 51 banks, covering 70% of EU banking assets. These banks entered the process with an average Common Equity Tier 1 (CET1, i.e., percentage of Tier 1 capital held by banks) [ 22 ] ratio of 13% ...
Effectively, the ECB used both traditional and nontraditional monetary policy tools and measures. The ECB lowered the key policy interest rate, in April 2010 from 1% to a remarkably low rate of 0.75% in July 2012, [4] and reduced the minimum reserve requirements from 2% to 1% in December 2011. [5]
Loans and deposits are the only instruments that will be considered, with credit derivatives and off-balance-sheet items being excluded from the scope of the regulation. [9] Loans and deposits include: deposits other than reverse repurchase agreements; overdrafts; credit card debt; revolving credit other than overdrafts and credit card debt
The 2012–2013 Cypriot financial crisis was an economic crisis in the Republic of Cyprus that involved the exposure of Cypriot banks to overleveraged local property companies, the Greek government-debt crisis, the downgrading of the Cypriot government's bond credit rating to junk status by international credit rating agencies, the consequential inability to refund its state expenses from the ...