ECB Under Fire, Money Printing to Continue, Interest Rates Kept Negative

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The European Central Bank has come under criticism by Germany and northern Europe as they have apparently reached consensus to continue money printing for another year or so from today.

ECB has not yet determined the exact amount of money printing, but it will be running at around $60 billion to $30 billion every single month.

That is ECB will print as much money as the total market cap of bitcoin or the total market cap of ethereum every single month for the next 12 months.

At the same time, they will keep interest rates at -0.4. That is, they will pay banks to borrow from them, a luxury that isn’t quite passed to ordinary people who still have to pay those banks to borrow.

A policy that has been in place singe 2014, in which period “the ECB has spent more than 2 trillion euros on bonds and charged banks on their idle cash.”

That has led to criticism of ECB, which some accuse of “fuelling price bubbles in richer countries in the north of the euro zone,” especially in Germany, according to reuters.

At the same time, the European Central Bank has apparently made some $8 billion in profits from Greece’s troubles, with the ECB stating their “holdings of Greek sovereign bonds acquired under its Securities and Markets bond-buying programme (SMP) had resulted in €7.8bn of net income interest between 2012-2016.”

While another southern country, Italy, is still mired in bank problems, this times apparently caused by ECB through a new rule on bad loans which has led to some constitutional crisis of sorts. Reuters reports:

“The head of the EU Parliament’s influential economic affairs committee has urged the European Central Bank to “correct” its stance on bad loans.”

That is joined by Germany, out of all places, which accused ECB of going beyond its powers, with Markus Ferber, an influential member of Merkel’s party, stating:

“I… think that the ECB went beyond its mandate and in my opinion that undermines confidence in the work of the ECB as a supervisor.

The ECB tried to come up with universal new capital requirements. Such universal rules, however, should be a prerogative of the European legislator.”

Arguably, it’s not the first time they have gone beyond their powers. In telling Estonia they could not issue an ICO as the currency of the euro is the euro, the ECB may have gone beyond its mandate, interfering in the internal affairs of a sovereign country.

But while there may be such little spats, the banks bailout and the money printing keeps running in the old continent ten years on since banks bankrupted countries.

 

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