Term from the central bank’s vocabulary. In this case, the central bank explains and justifies measures. However, it does not comment on the details so as not to send the wrong signals to market participants. – In the wake of the Greek crisis, for example, the ECB announced in summer 2010 that it had purchased more than EUR 40 million worth of government bonds from eurozone countries on the secondary market in order to keep “dysfunctional markets” liquid. In this case, however, the central bank’s purchases probably served primarily the purpose of not exposing government bonds from Greece, Spain and Portugal to further market pressure. These securities had fallen sharply in price as a result of extensive sales by unsettled investors such as pension funds and insurance companies. The ECB therefore carried out repair work on the financial market. However, it initially refused to provide any further details on these purchases. – See purchases, central bank, code words, ECB sin, forward guidance, guidance, verbal, moral hazard, open-mouth policy, redistribution, central bank-inspired.
Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent!
University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: firstname.lastname@example.org