Bond purchase program of the ECB: Lautenschlager doubtful economic benefit – n-tv.de NEWS

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 Thursday 02 April 2015

 
 
 

 
 The ECB buys government bonds on a large scale. For some, a taboo – for others the recent economic hope. TO which belongs ECB Vice Lautenschlager. The desired low interest rates could run the program into the void.
 

 
 
 

ECB Executive Board member Sabine Lautenschlager doubts the hoped-for economic recovery in the euro zone by the bond purchase program of the European Central Bank (ECB). In addition, the politician makes money, given the low interest rates by some financial institutions in Germany. Their business models could medium- and get into a critical situation in the long term. They also called for a separation of monetary policy and banking supervision.

“At the low interest rates in the euro zone, I doubt whether the economic effects of the purchase program can achieve the desired magnitude,” Lautenschlager said the “Business Week”. The long-term yields were at a very low level even before the bond purchases. “The experience of the United States, however, show that purchases of government bonds are more pronounced, the higher the returns in question.”

The ECB had early March began their bond purchase program. The monetary authorities want to September 2016. monthly securities with a volume of 60 billion euros. They want their program – technically known as “QE” (Quantitative Easing) – fuel the bank lending and thus boost the economy

“Economic policy and monetary policy should be separated”

. Lautenschlager warned that low interest rates could lead to the formation of price bubbles in asset markets. “At low interest rates increase the risk of too risky investment behavior, it can easily be overheating or price bubbles in other asset classes form,” she said. In addition, the low level of interest rates can weaken the reform efforts of governments or even fail. An expansionary monetary policy can only provide an impetus for more growth. The decisive impetus must come from economic policy, she said.

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The low interest rates in combination with the high competition among commercial banks in Germany are Lautenschlager also a threat to the business model of some institutions. Therefore, the need to prevent that banks reacted only with riskier transactions or savings such as with job losses in risk management at low interest rates. Supervisors will respond to an increased risk in the balance sheet of banks with the request for additional allowances or more equity and improved internal controls.

According thugs who share responsibility in the European Central Bank both for monetary policy and banking supervision is also advocated a separation of the two areas. “Everything that runs between monetary policy and supervision goes over my table. And I am aware that I must convey in my bridge between the two areas,” she said. “In the long term, but I consider that a separation of the two tasks for the better choice.”

  Source: n-tv.de
 

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