The likelihood is, as many on the ECB’s governing council believe, that QE will have limited potency and that there is not much left in the monetary locker. The key to addressing deficient eurozone demand lies in fiscal policy. Of course, the ECB can do something. Asset purchases are quasi-fiscal to the extent that they expose European taxpayers to the risk of capital loss and default. At today’s historically low yield levels capital losses look a near certainty. That is a central plank in the case for scepticism about full-blown QE.
Posted on: Tue, 11 Nov 2014 18:47:15 +0000
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