Much is being made of the ECB Governing Council’s debates about whether it would ever be prepared to do Quantitative Easing, buying outright member state sovereign bonds. Draghi and a majority seem in favour of it, but not yet. It is speculated that about 10 maybe against.
Yet the ECB has already determined to embark on credit easing – taking onto its balance sheet up to 1 trillion euros of private sector assets.
A characterisation of the critics of BoE and Fed unconventional policy is that it was too much focused on buying the assets where one would expect there to be the smallest amount of stimulus resulting. QE is an exchange of assets that are more similar than in the case of credit easing. Event study and other analysis showed pretty consistently that buying government securities did raise their prices (lower yields). But at the same time the evidence…
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