The European Central Bank’s reluctance to ramp up its government bond purchases has led to it being viewed as the most conservative, most dogmatic of the major central banks.

True, as evinced by the miniscule scale of last week’s bond purchases, the ECB has been far less amenable than its counterparts to do anything with a mere whiff of monetary financing attached to it. But the view of the ECB as unbending is unfair when it has been far more willing, and quicker, to relax the terms on which it provides banks with cash than either the Bank of England or the Federal Reserve.

As Christian Noyer, governor of Banque de France, said last week, the move to expand massively the ECB’s support for banks by not only introducing unlimited three-year loans but broadening the list of eligible collateral, was “our bazooka”. He also suggested that the funds borrowed from the ECB could be used to buy government bonds.

That the ECB is far more comfortable with such a “bazooka” than a more direct solution such as, say, capping yields on government debt, may owe much to one of the more arcane aspects of the history of the eurozone’s central bank. Read more