The ECB’s ‘unorthodox’ monetary policy [What Think Tanks are thinking]

In March 2015, the European Central Bank (ECB) launched its quantitative easing (QE) programme, the so-called Public Sector Purchase Programme, under which the ECB buys financial assets from euro-area banks, corporations or governments. This 60 billion euro per month scheme is aimed at putting downward pressure on bond yields, warding off deflationary risks, and generally, stimulating the economy by lowering the interest rate carried by various financial instruments.

According to many analysts, the ECB’s action has helped to contain deflation and lowered the borrowing costs of euro zone countries previously encountering sovereign debt problems. The ECB’s critics say its unorthodox actions, which followed similar operations by the US Federal Reserve, the Bank of England and the Bank of Japan, could still stoke inflation over the mid-term. The European Court of Justice ruled on 17 July that the crisis-fighting plan of the ECB to buy government bonds in potentially unlimited quantities was legal.

This note offers a selection of recent studies, reports and commentaries by some of the major think tanks and research institutes analysing the question of QE and other ECB policies.

Written by Marcin Grajewski.

• Primary Source

ESO: Background information: ECB launches bond-buying scheme of €60 billion per month http://www.europeansources.info/record/twitter-ecb-and-eurosystem-national-central-banks-have-as-previously-announced-started-purchases-under-the-public-sector-purchase-programme-ecb-launches-bond-buying-scheme-of-e60-billion-per-mont/

ESO: Background information: ECB announces expanded asset purchase programme http://www.europeansources.info/record/ecb-announces-expanded-asset-purchase-programme/

---