Free exchange: The Exceptional Central Bank

Posted: August 1, 2014 in economy
Tags: , ,

UK Only Article: 
standard article

Issue: 

Winning the battle, losing the war

Fly Title: 

Free exchange

Rubric: 

The European Central Bank should adopt quantitative easing now rather than as a last resort

Main image: 

20140802_FND000_0.jpg

ALONE among its peers, the European Central Bank (ECB) has resisted quantitative easing (QE). That policy—creating money to buy financial assets—has been used at varying times by the central banks of America, Britain and Japan to fight deflation and stimulate economies flattened by the financial crisis of 2008. Yet the ECB still shuns QE, treating it as a weapon of last resort, even though the euro zone is suffering from “lowflation”, with prices rising by just 0.5% in May and June, far below the bank’s target of almost 2%. Is it right or wrong to forgo a policy that has become standard practice elsewhere?
One reason to doubt the efficacy of QE in the euro area is that banks rather than markets dominate the provision of credit there. In America, in contrast, …

via Economic Crisis http://ift.tt/Xm8RPx

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s