The ECB's Expanded Asset Purchase Programme

On 22 January 2015, the European Central Bank (ECB) launched its Expanded Asset Purchase Programme (more commonly known as quantitative easing, or QE) with the aim of reviving the euro area economy. This unconventional monetary policy instrument – under which the European Central Bank will create new money to purchase euro-denominated, investment-grade securities issued by euro area governments and European institutions – has generated lively debate among policy practitioners, academics and the media. The results achieved in countries that have previously implemented QE (the US, UK and Japan) have been mixed. But discussions on its introduction by the ECB have been particularly lengthy since the euro area presents particular challenges that relate to the legality and the feasibility of the programme, and these may impede the ECB's programme from fully realising its potential. These challenges are also the reason why the ECB stressed during the press conference following its decision to launch QE that the programme will not be a panacea, but must be accompanied at national level with structural reforms, as well as fiscal policies that support the overall recovery of the economy.