Moral hazard will result from ECB bond buying
|Publication:||Press Article No. 10, 2011|
|Topic Area:||Macro Finance|
|Keywords:||lender of last resort, ECB, sovereign debt|
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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