The Non-Standard Monetary Policy Measures of the ECB: Motivations, Effectiveness and Risks

Abstract

This paper examines the challenges faced by the European Central Bank since the outbreak of the global financial crisis. From 2008 to 2014, the need to preserve the correct functioning of the monetary policy transmission mechanism and ensure the supply of credit to the private sector stretched the limits of conventional monetary policy. In 2015, the risk of deflation led the ECB to start a large scale asset purchase programme. The analysis is largely based on a review of the many studies that Banca d’Italia staff has produced on the factors that have brought inflation to unprecedented low levels in 2014 and on the effects of the asset purchase programme.

Keywords: monetary policy, global financial crisis, sovereign debt crisis, deflation, asset purchases

JEL Classification: I31, I32, D63, D31