On March 10, 2016, Mario Draghi announced that the European Central Bank (ECB) will purchase 80 billion EUR worth of bonds per month. That sounds pretty impressive. But how does the purchase of bonds by the ECB actually work? How does it affect debtors and savers? And what are the risks of this policy?
In this (long) post, I explain the mechanics of what the ECB is doing. Continue reading “How central banks influence interest rates by quantitative easing”