Nuclear option

A term for central bank purchases in general and, in particular, for the ECB’s decision in 2009 to purchase non-marketable government bonds of member countries. According to the prevailing opinion in monetary theory, bond purchases are among the weapons of a central bank that may only be used in extreme emergencies, namely exclusively when the economic cycle threatens to collapse completely and all other means have been exhausted. – The purchase of generally worthless government bonds held by banks was used not least to prepare many shaky institutions (endangered banks) for the stress test due in 2014 by the European banking supervisory authority based at the ECB. If this was done with forethought, then the fears of the critics of European banking supervision, who strongly warned against locating this new supervisory authority at the ECB, are justified. – AIGDeal, bond spread, presumption, central banking, bail-out, bank, systemic, banking union, bazooka, balance sheet adjustment, blame game, blood toll, risk sharing, ClubMed, covered bonds, deficit financing ban, expropriation, cold, euro bonds, common, European Monetary Union, fundamental error, ECB sin, Friedman thesis, Greece crisis, Ireland crisis, emergency liquidity assistance, moral hazard, Plan C, policy cliff, policy default, quantitative easing, debt drug, seven percent limit, sovereign debt repayment, debt repayment pact, European, transfer union, redistribution, central bank-induced, fuzziness, constructive, asset levy, contract compliance, confidence bubble, forced expropriation.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/