- The ECB has lost credibility because they have rejected such purchases in the past, they said last
Thursday that it had not been discussed, and that it is violating the spirit of the treaty. - Purchases of sovereign securities increases inflation risks either via the increase in money supply (if not fully sterilised), via losses on the central banks’ balance sheets, or through inflation expectations.
- Finally, concern has been expressed that central bank purchases might lead to moral hazard on the
policy front.
31641745-GS-European-Weekly-Analyst
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