As it celebrates its 20th anniversary, the European Central Bank (ECB) does not look much like the central bank that inherited from the very orthodox Bundesbank on 1 June 1998, according to Jean-Luc Proutat, Research Analyst at BNP Paribas.
“The financial and Eurozone crises reshuffled the cards. From unlimited lending at fixed rates and extended periods of time, covered bond purchases, forward guidance, and key rates below the zero lower bound, the ECB implemented many measures derogating from conventional monetary policy.”
“However, the veritable rupture happened via the launch of quantitative easing (QE).”
“On 1 January 2015, what had once seemed unthinkable from a German perspective occurred, as the ECB began purchasing considerable amounts of sovereign debt securities. It now holds 20% of government bonds, and total assets on its balance sheet account for 40% of GDP.”
“By year-end 2018, the ECB should halt its QE programme, after it helped the eurozone to get back on its feet. This is a rather impressive track record for an only 20 year old institution.”
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