ECB’s quantitative easing should only be used in extreme cases — Bundesbank chief

The European Central Bank (ECB) should only resort to large-scale bond purchases in "absolutely exceptional cases" given the significant losses caused by this monetary stimulus measure, according to Bundesbank President Joachim Nagel.

The head of Germany’s financial regulator has joined a growing number of officials urging the ECB to abandon aggressive money printing policy. Nagel stressed that in the future, large-scale asset purchases should only be considered when interest rates hit their lower bound and strictly as a last resort.

After bringing high inflation under control, the ECB is now reviewing its strategy, including the role of quantitative easing, with key decisions expected in coming weeks, Reuters reports.

Between 2014 and 2021, the central bank purchased 5 trillion euro ($5.77 trillion) worth of debt securities. This move drew heavy criticism for inflating bubbles in financial markets and real estate. As the agency notes, the subsequent surge in inflation and interest rates has left the ECB and national regulators, particularly Germany's Bundesbank, facing steep interest payments on reserves while collecting little income from the bonds.