In response to the COVID-19 crisis, the ECB has relaunched a massive asset purchase programme within its combined-arms monetary strategy. This paper presents and discusses the theory and the evidence of the central bank’s asset purchases, mainly in the euro area. It analyses the role of asset purchase programmes in the ECB’s toolkit and the potential associated risks, focusing specifically on the problems of the programmes’ unwinding. Finally, the paper offers some possible alternatives to the asset purchase programmes.

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Disclaimer

This paper was prepared for the European Parliament’s Committee on Economic and Monetary Affairs (ECON) as an input to the Monetary Dialogue of 28 September 2020 between ECON and the President of the European Central Bank. The original paper is available on the European Parliament’s webpage, as part of a series of papers on "The ECB’s Asset Purchase Programmes: Experience and Future Perspectives": https://www.europarl.europa.eu/cmsdata/211589/Topic%202%20Compilation.pdf Copyright remains with the European Parliament at all times.