Experiences of the ECB’s Quantitative Easing Program

Abstract

After the crisis in the Eurozone the financial stability has been properly restored. However, the price stability mandate of the European Central Bank (ECB) is not met for several years. The threat of deflation and the continuing economic problems are serious challenges. These problems served as reasons for the ECB to launch its quantitative easing (QE) program in 2015. It should be noted, that over this period the US has already started to tighten its monetary policy. Considering the features of the European banking system and the Eurozone, one can ask, whether the classical QE can be an efficient tool for the Eurozone to recover the economy. The aim of this paper is to reveal the facts that were crucial in the ECB’s actions, and determine, why the European Central Bank compared to other central banks pursued different crisis management. The paper pays particular attention on the experiences of the quantitative easing so far in the Eurozone. It discusses in detail the issue of the inflation, as well as the factors which can restrain the effectiveness of the QE. In the last part of the paper I conduct a regression analysis in order to examine the relationship between the money supply and inflationary indicators.