Helicopter money

A “ helicopter money” policy consists in the central bank handing out banknotes to the population. Equivalently , the government may set up public transfer payments to domestic economic agents and have the resulting fiscal deficit be financed by money creation . There has not really been helicopter money in the euro zone, because , when the ECB introduced quantitative easing (2015), the euro zone’s fiscal deficit was already quite small (2% of GDP in 2015). Helicopter money would have had the advantage of: Giving purchasing power to households without having to rely on an acceleration in lending; Not needing to keep interest rates extremely low, which weaken s banks and credit supply over time. But, if helicopter money is to be used, it would have to be accepted that: In its first version (distribution of banknotes to the population), the central bank has liabilities with no corresponding assets; In its second, ultimately equivalent version (public transfer payments to economic agents financed by money creation and public debt monetisation ), the fiscal deficit remains permanently high.