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• 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.