ECB balance sheet

During the financial crisis that followed the subprime crisis, the ECB’s balance sheet total ballooned from EUR 900 billion to over EUR 2,600 billion by spring 2012. This figure has almost tripled since 2007. Experience has shown that a strong expansion of the central bank’s balance sheet leads to inflation in the medium term. – In its rescue efforts, the ECB had lowered its collateral requirements to such an extent that shaky banks were allowed to deposit questionable bonds of their home countries with the ECB as collateral for fresh money. Extensive use was made of this. The proposal to transfer the junk bonds to the European Stabilization Mechanism has so far been resisted, especially by Germany, because this was rightly seen as a further step toward a transfer union. – See Bailout, European Monetary Union, Fundamental Error, ECB Sin, Rescue. – Cf. ECB Monthly Bulletin, September 2013, pp. 45 ff. (ECB balance sheet expansion since 2007; overviews).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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