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Abstract
The paper discusses possible unintended consequences of these non-standard monetary policy measures in the current context of weak economic activity and subdued growth going forward. It looks at specific risks for price stability and asset price developments. It deals with the question of whether US-style quantitative easing (QE) may serve as a blueprint for the ECB. It argues that the Fed may have got a “tiger by the tail”, i.e. the US-style quantitative easing may led US central bank to accept either a recession or inflation.
The paper also investigates whether the OMT programme imposes costs onto the EU taxpayer. It does so by looking at the legal background of the OMT programme and at the specific creditor status of the ECB under different assistance programmes.
Finally, the paper outlines some policy implications stemming from euro area cross-country differences in money and credit growth. It also makes an assessment of the tools available to ECB to stimulate the economy, for example, by investigating how the effectiveness of the ECB’s policies can be improved through enhanced transparency and the new course of “forward guidance”.