VoxEU: Risk-sharing and the effectiveness of the ECB’s quantitative easing programme

23 October 2015

Will the risk-sharing arrangements within the ECB’s quantitative easing programme reduce its effectiveness? The views of leading UK-based macroeconomists are exactly evenly divided on this question, according to the latest survey by the Centre for Macroeconomics.

Risk-sharing in the ECB’s QE

In the latest of its monthly surveys of leading UK-based macroeconomists, the Centre for Macroeconomics (CFM) focused on the risk-sharing arrangements within the QE programme. The ECB indicated that the credit risk of the €6bn debt of the supranational EU institutions and €4bn of the national debt securities would be shared across the Eurosystem according to shareholdings.3The credit risk of the remaining €40bn of national securities would remain with the national central bank of the issuer. This is in contrast to the ECB's earlier Securities Market Programme (SMP) in 2010-2012, which involved the acquisition of €220bn public and private debt securities from Greece, Ireland, Italy, Portugal and Spain to be held to maturity. Profits and losses are to be shared across national central banks according to the ECB’s shareholdings rather than borne by the national central bank of the issuing government.

Effectiveness of QE

According to press reports, the decision to allocate the major fraction of national securities back to national central banks reflects a compromise decision.4 A number of arguments have been put forward in favour of this approach:

There are also arguments in favour of greater risk-sharing:

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