The IMF Country Reports Series covers economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with officials of the country, is published at the option of the member.
This Selected Issues paper on Euro Area Policies 2013 Article IV Consultation highlights the monetary transmission mechanism and monetary policies. The European Central Bank has announced the Outright Monetary Transactions framework to address severe distortions in sovereign bond markets and safeguard monetary transmission. The cost of unsecured bond issuance remains elevated for both core and periphery banks, but there is a growing divergence between the two, driven mainly by rising periphery spreads. Weak growth and high levels of private balance sheet debt in the periphery are weighing on the health of bank balance sheets.