The decision by European Central Bank policy makers in December to change the rules of their Public Sector Purchasing Program has had a pretty consequential outcome.
By letting national central banks — Germany in particular — buy their government bonds at yields below the current deposit rate of minus 40 basis points, ECB officials have unwittingly spelled the end for the quantitative easing program as we know it.
After months of buying, national central banks are simply running out of longer-dated securities they can purchase as they bump up against ECB rules that stop them taking on more than a third of any particular issue. They will therefore have to buy more shorter-dated debt at heavily negative yields…
Read more : Bloomberg, 13.02.2017