Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/256326 
Year of Publication: 
2015
Series/Report no.: 
SWP Comments No. 3/2015
Publisher: 
Stiftung Wissenschaft und Politik (SWP), Berlin
Abstract: 
2015 will be a defining year for the European Central Bank. It is expected to start buying up government bonds from member states from the end of January. This means the ECB is entering into significant risk and becoming dependent on the fiscal policy of the member states. As the example of Greece demonstrates, the central bank is thus making itself - along with other state creditors - vulnerable to blackmail. Governments can threaten to stop servicing their debt, forcing the ECB to continue financing them. Furthermore, the reasoning for starting to finance member states is spurious. The supposed risks of deflation are actually small: while the prices of apples and heating oil have fallen, those of machine tools and consumer durables have not. At the same time, it is becoming increasingly apparent that the depreciation of the euro brought about by the loose monetary policy harbours huge disadvantages for many of Europe's trade partners - from Switzerland to the US. (SWP Comments)
Document Type: 
Research Report

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