France: The classic example of the moral hazard created by expansionary monetary policy

The various economic agents in France may think that the ECB will always intervene to prevent another debt crisis or a crisis related to the bursting of asset price bubbles. The perception of insurance given in this way by the ECB (the ECB is supposed to insure the various economic agents against a loss of borrower solvency and against a fall in asset prices) is the very definition of a moral hazard. As a result, i n France: A ll debt ratios are rising (public, household, corporate); A sset prices are rising (equities, real estate), leading to the prospect of a disaster should interest rates rise in the future. It is never healthy for the central bank to give rise to a moral hazard in this way.