Quantitative easing: to deal with the root of the problem, the ECB should tackle non-performing loans

Quantitative Easing (QE) – the unconventional form of monetary policy by which a central bank creates new money electronically to buy financial assets, thus helping to increase private sector spending and lower inflation – has been used by the European Central Bank (ECB) in the past. It is widely expected that an extension of the current QE programme will be announced during the ECB Governing Council meeting today, 10 March. What are the implications, and what are the risks? Eddie Gerba and Corrado Macchiarelli argue that the most effective way to deal with the root of the problem would be to accelerate the resolution of Non-Performing Loans (NPLs).