Following the results of Europe’s bank stress tests, there are growing calls for the European Central bank (ECB) to start buying sovereign bonds in an effort to stump up the region’s flagging recovery.
The ECB has already launched a host of stimulus measures to reverse growth-sapping disinflation, including cutting interest rates to record lows and announcing plans to purchase covered bonds and asset-backed securities (ABS).
Many economists have warned this is not enough, however, with former ECB Governing Council member Athanasios Orphanides telling CNBC that the central bank “should have already started” buying sovereign bonds—or full-blown quantitative easing (QE).
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