Heribert Dieter

Collateral Damage from ECB Strategy

Ultra-loose Monetary Policy Has Little Benefit – and Harms Many

SWP Comment 2015/C 03, February 2015, 8 Pages

Regions:

Europe

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 Research Paper

Evita Schmieg
Connections between Trade Policy and Migration

A Sphere of Action for the EU


Daniel Voelsen
Cracks in the Internet’s Foundation

The Future of the Internet’s Infrastructure and Global Internet Governance