Report
It is impossible for the ECB to end its highly expansionary monetary policy before the other major central banks
All central banks in OECD countries are now pursuing a highly expansionary monetary policy. Even though the massive money supply growth is leading to a loss of confidence in money, it is not leading to capital outflows and exchange rate depreciation since all central banks are pursuing the same policy. No OECD currency can be a safe haven for holders of another currency. This situation is very different from that of emerging countries. But this also means that a region cannot end this highly expansionary monetary policy on its own: its currency would then become a safe-haven currency and would appreciate considerably against the others. The ECB will have to wait for the other central banks to end their bond purchase programmes before it can put an end to its own programmes. There will therefore have to be coordination between central banks on the timing of the exit from the highly expansionary monetary policy .
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Natixis
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Patrick Artus
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