Month: June 2020

Jun
04
2020
By Maxwell Qian
European Central Bank Ramps Up Asset Purchases in Light of Pandemic

European Central Bank Ramps Up Asset Purchases in Light of Pandemic

All Posts, Economy and Government
On June 4, 2020, the European Central Bank (ECB) announced it would increase its envelope of asset purchases by €600 billion to a total of €1.35 trillion. The increased purchases will further the central bank's policy of monetary easing in order to help households and businesses deal with the economic effects of the COVID-19 pandemic. The increase comes in response to disinflation and fears of a possible deflationary spiral. The ECB plans to continue asset purchases until it believes the coronavirus crisis is over and plans to reinvest any payments from maturing assets into further purchases. European interest rates will…
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Jun
02
2020
By Maxwell Qian
Negative Interest Rates: A Novel Solution or a Novelty Item?

Negative Interest Rates: A Novel Solution or a Novelty Item?

All Posts, Economy and Government
In the wake of the economic downturn caused by the COVID-19 pandemic, some in the United States, including president Donald Trump, have called on the Federal Reserve to push interest rates below zero.  Negative interest rates would be unprecedented in the US but they have become established monetary policy in Europe and Japan.  Such rates represent a logical extension of expansionary monetary policy while also breaking key economic laws.  This counterintuitive policy raises more questions than it appears to answer.  How do negative interest rates work? could we really be paid to borrow money? and most importantly, can negative interest…
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