Extraordinary times call for extraordinary measures. The European Central Bank introduced a range of measures to stabilise the region’s economy when the worst financial crisis for decades began in 2008. Quantitative easing (QE) was seen as one way to help boost liquidity in the banking system – but did it have the desired effect?
Research by our faculty shows that QE may affect asset prices and possibly lead to risks in the Eurozone. Their studies also suggest ways in which the European Central Bank can strengthen economies and markets in turbulent times.
Organising European funding so that governments with limited capital can protect the region’s economies is one solution. Another is to introduce a sovereign debt restructuring mechanism to help insolvent countries within the EU. This measure would not only reduce debt in the Eurozone, but also give European nations the financial stability to deal with future crises.