ECB policies are setting the stage for severe instability with a property bubble inflating like a flash in Austria,Germany and Luxembourg The European Central Bank’s latest policy moves have shocked many observers; while their goal – to prevent deflation and spur growth – is clear, the policies themselves are setting the stage for severe instability.
The policies in question include setting the interest rate on the ECBs main refinancing operations to zero; raising monthly asset purchases by €20bn (£15.7bn) to €80bn; and pushing the interest rate on money that banks deposit with the ECB further into negative territory, or to -0.4%. in addition,the ECB has launched a series of four targeted longer-term refinancing operations, which also carry negative interest rates. Banks receive up to 0.4% interest on ECB credit that they take themselves, or if they lend it out to private businesses.
Continue reading...
Source: theguardian.com