THE QUANTITATIVE EASING OF THE EUROPEAN CENTRAL BANKDrago Cvijanović Željko Vojinović Sanja Živković |
Published 07/05/2019 |
ABSTRACT
Quantitative easing, as a non-standard measure of the monetary economy, was the solution of the world's largest financial systems to counter the recession and negative effects of the World Economic Crisis, primarily caused by US mortgage markets in 2008. The four largest central banks in the world (FED, ECB, BOE, BOJ) have defined the program of measures of massive redemption of assets in the financial market, in conditions of limited targeting of inflation by low interest rates. The focus of the paper is on the analysis of the activities and effects of the quantitative easing policy of the European Central Bank. The European Central Bank, relying on the banking system of the financial system, focused on the mechanism of increasing the supply of money through the primary purchase of government bonds through the national central banks. The objectives of the quantitative easing program are ultimately the increase in the inflation rate to 2% in the medium term, with the increase in investment, consumption and the stimulation of economic growth, taking into account the widespread acute recession as a result of distortions in the global financial market. As a result of the applied measures of non-standard mass-buying policy, there is a direct increase in the supply of money and at the same time an increase in the central bank's balance assets (assets).
Keywords: quantitative easing, ECB, financial crisis.