The European Central Bank is due to decide whether and how to undertake quantitative easing (QE) via large-scale purchases of government debt on secondary markets. For Germany – as the Eurozone’s largest economy and one with a decidedly conservative monetary stance – this seems to be the ultimate nightmare. But the markets are already betting that QE will come. With the Eurozone sitting close to deflation, the ECB must react to reach its inflation target of 2%. What are the German fears and do they withstand serious scrutiny?
In this piece, written for The Conversation, I discuss the validity of the these fears and their potentially negative impact on the details of a QE program.