Breakthrough in European monetary policy – Policy

Breakthrough in European monetary policy – Policy

The European Central Bank (ECB) decided that from March start buying government bonds of euro area countries. Every month in its portfolio will arrive 60 billion of new securities, especially those issued by the governments of Germany, France and Italy.

This is a breakthrough in the European monetary policy . For a long time economists and some politicians urged for the ECB to buy back government bonds, because it is now one of the few ways to boost the EU economy.

Quantitative easing, commonly known as money Reprints weakens because the European currency and at the same time helps lower deficits. Especially for those countries outside the euro zone, which face serious budget problems.

Thus, the decision of the ECB will reduce the pressure to cut public spending, especially those intended for investment, and increase the competitiveness of euro area exporters. As a result, the entire community market should gradually escape from slowing down. This also will help consumers who, thanks to the flood of money from the ECB will be able to cheaper and easier to get a loan from the bank.

The buying of bonds should therefore also benefit Poland. We are still strongly tied trade with Germany – according to calculations Policy INSIGHT production growth in exporters across the Oder River about one percent of the results even faster growth in sales of Polish companies in Germany. Expected in connection with the activities of the ECB recovery in other euro area countries will also be support for Polish entrepreneurs.

Ironically, increased spending on the ECB will also benefit the government in Warsaw. Part of the money that is pumped into the European Union bank financial market, because the market will our government bonds and reduce the maintenance costs of the Polish debt. So to break the German opposition to buying bonds that halted the ECB prior to the earlier extension of quantitative easing, should help in recovery of the Polish economy in the coming quarters.

Not everyone will benefit from the activities of the ECB . Purchase of bonds causes a weakening of the euro and the Swiss franc strengthening through the flow of capital from the EU financial markets in Zurich, Basel and Geneva.

The effects of changes in monetary policy was evident immediately after the start of the conference by Mario Draghi, ECB president. Zloty exchange rate strongly decreased from zł 4.30 am to 4.25 zł at the end of the day, and the rate for the franc from temporary swings stabilized at 4.28 zł. Thus, for the first time since the Swiss decision to release the exchange rate, frank cost more than the euro.

In the coming weeks are possible further increases in the price of the Swiss currency . Especially if gold will weaken against the euro – eg. After a possible rate cut by the MPC. The ECB’s decision therefore means that the franc will remain the way.

Customers who have problems with repayment of housing loans, instead of waiting for the fall, they should go to the bank and ask for a change in the conditions of the loan. They may ask for an extension of the term of the loan, a temporary reduction in installments or even full suspension of repayment. Most banks are now open to such demands.