In announcing a new round of extraordinary measures to support the euro-area recovery, the European Central Bank is sending three loud and unambiguous messages.
First, it is committed to experimenting even more with its use of unconventional monetary policy, including by taking the deposit rate even more negative and starting a program to purchase asset-backed securities.
Second, it is positioning itself for full-scale quantitative easing — but on the condition that European governments show more flexibility on fiscal policy and put into place the structural reforms needed to support healthy growth.
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