The ECB’s sovereign quantitative easing will be supportive to the euro area economy but it is not panacea | Eurobank
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The ECB’s sovereign quantitative easing will be supportive to the euro area economy but it is not panacea

• QE has contributed to a significant depreciation of the EUR currency and conveys a strong signal about the ECB’s determination to defend price stability
• However, the limited risk-sharing scheme of the QE program may constrain its potential to reduce financial fragmentation in the euro area.
• Already low sovereign and corporate bond yields raise concerns about the effectiveness of QE to work through the portfolio rebalancing channel.
• The impact of QE on euro area households’ wealth and disposable income is also expected to be less pronounced than was the case with the Fed’s QE.
• QE could have a limited impact on spurring bank lending, as banks remain hesitant to extent credit.