Moral Hazard will Result from ECB Bond Buying

Publication: Press Article No. 10, 2011
Topic Area: Macro Finance
Authors: Otmar Issing
Date: Nov 2011
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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