When Mario Draghi insisted last week that central banks buying short-term government debt falls “within the range of classical monetary policy instruments”, most thought he was just having a dig at Germany’s Bundesbank, which views bond buying as beyond the scope of the ECB’s mandate.
But Mr Draghi might have a point.
Quantitative easing – where central banks buy government bonds outright – has a longer history than most think. Interestingly, it is a history in which the Bundesbank has played a key role. Read more