Coba chief economist Jörg Krämer points out that the ECB’s balance sheet dilemma is primarily due to the purchase of many government bonds during past crises. Politicians are now receiving the receipt.
The purchases have led to an “enormous flood of liquidity” at the banks, which has an impact on various areas, said Krämer and continued: “The banks now have more balances with the European Central Bank (ECB) than they need for their minimum reserves. This situation reduces the disciplinary effect of the interbank market and leads to less market discipline.”
Buying government bonds and paying with short-term deposits creates a risk, especially if interest rates rise. This could lead to losses for central banks and create political pressure not to raise interest rates too much, says Krämer.
wallstreetONLINE central editorial office
0 Follower
show more
Sign up HERE for the newsletter from the wallstreetONLINE central editorial team – an overview of all the top topics of the stock market week! Don’t miss any important investor topics!
The editor-in-chief of the wallstreetONLINE central editorial team is responsible for contributions to this journalistic channel.
The specialist journalists from the wallstreetONLINE central editorial team and their colleagues from the partner editorial offices report exclusively, well-founded, balanced and independent for investors.
The central editorial team researches intensively in order to be able to provide investors in the self-decision category with relevant information for their investment decisions.
show more
Subscribe to RSS feed