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ECB bond purchases: the end of unconventional monetary policy

The European Central Bank wants to buy in the new year, no additional bonds on the market. This is just the first step to tighter monetary policy.

The financial world for many months to his lips, she tried almost every cough, every word of the President of the ECB to interpret. And for a Long time, Mario Draghi says that the Central Bank will buy from 2019, no additional bonds of countries and companies.

13. December, it keeps its word and proclaimed: "as regards non-standard monetary policy measures, the net purchase under the program for the purchase of assets by the end of 2018 values." In clear text: The European Central Bank will buy in 2019, no additional bonds on the market: the first tentative step to a tighter monetary policy.

in March of 2015 bought the note Bank bonds, i.e. promissory notes,. First of all, only States and, later, of the selected companies. It sets out that the in the circulation coming, the money helps the economy to Finance.

No additional debt

This was, without a doubt, unconventional monetary policy, the ECB as standing, but not alone, says Jan Pieter Krahnen, a Professor at the House of Finance of Frankfurt University tickets. Also, the Central banks of the USA, great Britain and Japan had resorted to such means.

For 2650 billion euros, the ECB has purchased up to now, bonds. This stock will keep for some time to come. That means, a bond is purchased in the same amount as a new one. The Central Bank buys only not additional promissory notes.

"The ECB's 1:1 similar to what you are announcing," says Joachim sound Mayer, head of capital market Department of the Deka Bank. Transparency, so predictability is crucial for the confidence in the ECB, as the players in the financial markets.

And this trust is crucial if the Central Bank wants to adopt in the future, very slowly, from the policy of cheap money.

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