European banks: Easing means squeezing

Posted: January 30, 2015 in economy
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Go ahead, Angela, make my day

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European banks


Quantitative easing has both good and bad implications for Europe’s banks

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EUROPEAN bankers depressed by the miasma in Athens might cheer up a bit if they focused on news from Frankfurt instead. The recent unveiling by the European Central Bank (ECB) of a €1.1 trillion ($1.25 trillion) package of “quantitative easing” (QE)—the printing of money to purchase vast quantities of bonds—should be as heartwarming for them as a resurgence of the euro crisis is chilling.
Cynics might be forgiven for thinking QE is a policy designed purely to aid financiers. Banks, after all, borrow vast sums of money (from bond markets, depositors and other creditors) to acquire financial assets (corporate bonds, say, or the promise to repay a loan with interest). Even looser monetary policy helps the banks on both counts. On the one hand, it is cheaper for them to borrow money as …

via Economic Crisis


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