20 December 2017

What should the ECB “new normal” look like?​

Christophe Blot, Jérôme Creel, Paul Hubert

The predictability of the exit from balance sheet policies is essential to ensure that financial markets can digest the extra supply of securities that they will face when the ECB will taper.
The question about what the central banks' balance sheets should look like in the “new normal” come down to the objectives of central banking and whether monetary policy should aim to maintain economic and financial stability.
The ECB should consider using balance sheet policies...