The role of the ECB’s QE in alleviating the Eurozone debt crisis
The role of the ECB’s QE in alleviating the Eurozone debt crisis

Summary/Abstract: In the wake of the Great Recession that begun in 2007, several central banks became trapped in the zero lower bound. The Federal Reserve Bank, the Bank of England, and the European Central Bank were unable to reinvigorate bank lending despite slashing their interest rates to a zero level. The Federal Reserve Bank and the Bank of England adopted their QE programs just after the collapse of Lehman Brothers to alleviate balance sheet recessions by facilitating economic recovery which in turn gradually unlocked credit and money creation. The decision to launch the ECB’s QE was significantly delayed which pushed the Eurozone into a double-dip recession. Despite being long overdue the ECB’s QE led to a number of favourable outcomes. One of these was a reduction in public debt service as QE programs are tools which facilitate government debt restructuring through de facto conversion of the treasuries purchased by the central bank into zero-coupon perpetuities.

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