End of an era: ECB expected to phase out bond buying

ECB - Luminale 2016 Euro Tower , MB
ECB - Luminale 2016 Euro Tower , MB

Leading banks expect Mario Draghi, the European Central Bank (ECB) chief, to announce a tapering-off in the bond-buying programme that saved the EU’s single currency.

The ECB decision, due on Thursday (26 October) morning in Frankfurt, would mark the end of the financial crisis that began in 2008 and that threatened to bankrupt several EU states, including Greece, Ireland, and Portugal, possibly sending them out of the euro. The ECB began buying sovereign and corporate bonds in 2015 using newly-created electronic money in a scheme called “quantitative easing” or QE.

It has continued to amass debt at the rate of €60 billion a month, building up a pile worth €2.3 trillion today. That, in turn, lowered the borrowing costs for governments and major companies, allowing them to invest cash into the European economy and helping to create jobs, growth, and mild inflation.

But the EU’s economic recovery, as well as the ECB’s own rules, indicate that the bank’s governing council will decide to phase out the scheme, leading economists predict…

Read more : EUObserver, 26.10.2017