Most of the research concerning unconventional measures has been focused on quantitative easing of Fed and the research concerning the ECB measures has been scant. A recent empirical investigation on the matter, published in September 20166, deals exactly with the spillovers of the ECB’s non-standard monetary policy into the CESEE economies. The empirical investigation employs an event study methodology, assessing whether the announcements of the ECB non-standard measures affected the nominal exchange rate, long-term sovereign yield, stock market indices and portfolio inflows. The findings suggest that ECB measures had moderate impact on all of the variables. Furthermore, the study proceeds with empirical investigation of the effects on the dynamics of cross-border capital flows, distinguishing between portfolio investment and international bank lending. The results reveal that ECB non-standard measures may have enhanced cross-border flows to the CESEE region. We will try to tackle some of the above-stated questions, by observing the most recent data on balance of payments, which can be used as an indication of the dynamics and the structure of the capital flows. We will observe the period before and after the crisis, and in the latter one, in order to observe the most recent changes, we will focus on the last three years, in particular. 6  Ciarlone A. and Colabella A., "Spillovers of the ECB's non-standard monetary policy in CESEE economies", Bank of Italy, Occasional Paper no.351, September 2016. Chart 7: Cumulative financial inflows as % of GDP, changes in p.p.

The exchange rate remained stable up to autumn 1996, partly because wage growth was low and overall demand did not generate pressures in the economy. Gradually, the krone began to show wider fluctuations. The experience of the latter half of the 1990s demonstrated that monetary policy cannot fine-tune the exchange rate. Developments in international financial markets led to more pronounced fluctuations. And more fundamentally, when labour market pressures rose and incomes policy failed, exchange rate developments no longer provided signals to wage formation and fiscal policy. High petroleum revenues, fiscal slippage and expectations of increased government petroleum revenue spending contributed to this. The exchange rate was therefore no longer suitable as a nominal anchor. Towards the end of the 1990s, monetary policy placed emphasis on the fundamental preconditions for exchange rate stability. Monetary policy instruments were oriented in such a way that price and cost inflation was brought down to the price stability objective of the European Central Bank (ECB). Pursuant to the Regulation of March 2001, the mandate for monetary policy stipulates that monetary policy shall be aimed at stability in the Norwegian krone’s internal and external value, thereby contributing to stable exchange rate expectations. At the same time, monetary policy shall underpin  2  BIS Review 90/2006  fiscal policy by contributing to stable developments in output and employment. The operational objective of monetary policy is low and stable inflation, with annual consumer price inflation of approximately 2.5 per cent over time.