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Between a rock and a hard chair

May 30, 2022

Good morning,

The ECB is now between a rock and a hard place. In order to implement a more restrictive monetary policy and roll back on quantitative easing, it needs to start offloading part of the government bonds it holds on its balance sheet. The problem is that it has build such important stakes over the last 10 years that there are not many foreign investors left. The ECB now owns for example 47.8% of t

he Italian debt compared to 27.4% ten years ago. We can all imagine what would happen to bond yields if no foreign buyers are around.

I wish you a nice week,


Source: Robin Brooks, Octavian Adrian Tanase

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