The ECB needs to reinvent itself and come up with new policy tools, Yanis Varoufakis, Greece's former finance minister told CNBC Thursday.
However, inflation — the main focus for the ECB — has failed to pick up to the bank's target of "close but below 2%." As a result, it announced its new round of QE in September, with monthly purchases set to reach 20 billion euros .
Otmar Issing, a former chief economist at the ECB, was also dismissive of the move, telling CNBC on Wednesday: "This does not make, in my mind, any sense."One of the potentialis that the additional money supply it creates may not achieve its ultimate goal: increasing bank lending and boosting investment.
Furthermore, QE could also ultimately lead to a devalued currency — meaning that imports would become more expensive. Speaking to CNBC, Varoufakis argued that the incoming ECB PresidentA euro-wide bond would include debt from different countries, mixing, for instance, Italian and German debt. The latter is perceived as a less-risky asset than Italian bonds and mixing the two is seen as controversial in some corners of the continent.
French President-designate of the European Central Bank Christine Lagarde reacts during a meeting prior's to attend a European Parliament's Committee on Economic Affairs at the EU Parliament, in Brussels, on September 4, 2019.
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