Policy options and risks of an extension of the ECB’s quantitative easing programme: An analysis

Abstract

During the press conference on 3 December 2015, president Mario Draghi reiterated the readiness of the ECB to adopt additional measures in order to maintain an appropriate degree of monetary accommodation. Different options are available, including the increase in the amount of monthly purchases of assets, currently set at 60 billion EUR per month. However, there are risks involved in extending these asset purchase operations, including the renewed criticism against the ECB for not complying with its mandate and entering the fiscal financing territory. This paper reviews the available unconventional monetary policy options for the ECB and considers the potential risks involved with each. It also briefly discusses key credibility issues that ECB might eventually face.