ECB’s bond purchases restrict monetary policy – DNB paper

The European Central Bank’s purchases of public-sector assets is weakening the transmission of its monetary policy, a working paper published by the Netherlands Bank argues.

In Effects of QE on sovereign bond spreads through the safe asset channel, Jan Willem van den End uses a regression model based on data from eurozone countries.

He finds the ECB’s purchase of public-sector assets boosts investor demand for tradable safe assets.

This increased demand comes largely from non-bank firms