On 12 September, the outgoing European Central Bank (ECB) president, Mario Draghi, announced that he would cut interest rates and continue the central bank’s bond-buying programme. This was in response to the looming recession in Europe and has triggered a fierce debate in the Eurozone between monetary hawks and doves, as well as EU politicians and technocrats, over the role of monetary policy in the post-crisis world.
Draghi’s announcement is another sign that Europe may be headed the way of Japan, whose economy has been propped up for nearly two decades by an unending quantitative easing (QE) programme. In the wake of the collapse of its own housing bubble in 1991, the Bank of Japan first started exchanging digitally-created money for government bonds in 2001. The central bank’s balance sheet has now reached 100 per cent of GDP.
Content from our partners
