Daily Archives: March 27, 2014

The surprising statement by Jens Weidmann, head of the Bundesbank, that quantitative easing “is not out of the question” in the eurozone, is not that surprising after all.

Last month’s judgment by the German constitutional court on the European Central Bank’s Outright Monetary Transaction indicated that the main problem with the commitment to do “whatever it takes” to save the eurozone lies in its unlimited nature, which could lead the central bank to purchase a large amount of assets of a specific country and thus take on to its balance sheet risks that could have budgetary consequences outside the control of national parliaments. The statement implicitly recognised that there would be no objections if the purchase of assets was limited rather than open-ended; and spread throughout the eurozone rather than concentrated on only one country. Read more