Ricardo Reis's picture
Affiliation: 
London School of Economics and Columbia University
Credentials: 
Professor of economics

Voting history

ECB's quantitative easing

======================================================================

Question 2:

Do you agree that the structure of the ECB's QE programme makes the Eurozone more fragile and increases the risk of one country leaving the euro?

======================================================================

Answer:
Agree
Confidence level:
Confident
Comment:
On the one hand, the structure of the program protects the solvency of the ECB and it prevents a redistribution of resources among member states, which is against its mandate but which the ECB has been pressured and/or tempted to do. So, insofar as the euro is irreversible, then the structure makes the Eurozone more robust. But, on the other hand, if we consider the possibility that one country may choose to leave, and that TARGET II and/or ELA balances would be reneged on, then this arrangement encourages local banks/citizens/speculators to run on their local banks and force an exit.

======================================================================

Question 1:

Do you agree that the design of the ECB's QE programme reduces its effectiveness? 

======================================================================

Answer:
Neither agree nor disagree
Confidence level:
Not confident
Comment:
While there is compelling evidence that QE has been effective in the recent crisis at reducing interest rates, the channels through which it operated are still being figured out. There is exciting research on the topic, but still not a definite conclusion. Therefore, concluding whether the particular approach taken by the ECB will improve or hurt that effectiveness is not something that I think we can confidently answer.

Pages