Moral Hazard will Result from ECB Bond Buying

Press Article No. 10, 2011

Authors:
Otmar Issing
Research Area:
Macro and Finance
Date:
Nov 2011
Keywords:
lender of last resort, ECB, sovereign debt
Abstract:

The prohibition of monetary financing is an indispensable element for a stable currency. Pressing the ECB into the role of ultimate buyer of public debt of individual member states would create the biggest conceivable moral hazard.

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