The European Central Bank As A Programme Of Quantitative Easing

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The European Central Bank recently began a programme of Quantitative Easing. Explain the meaning and purpose of this programme, and fully analyse its likely impact.

Kate Eugenie Mary Pickering
ECN 4110 Macroeconomics
Dr Ivan Cohen
8th April 2015
Word Count: 1,100 Words

The European Central Bank (ECB) is the central bank for Europe’s single currency, the euro. The ECB’s main objective is to maintain the euro’s purchasing power, and therefore price stability, in the euro area, which comprises of the nineteen European Union countries that have introduced the euro currency since 1999 (ECB, 2015d). The ECB and the national central banks of the Member States, whose currency is the euro, together constitute the Eurosystem; the monetary authority of the euro area. In order to maintain price stability, the Eurosystem undertakes the necessary economic and monetary analyses and adopts and implements appropriate policies in order to respond to monetary and financial developments (ECB, 2015e). This essay will analyse the possible impacts of quantitative easing (QE), recently introduced by the European Central Bank. Firstly, I will look at the European Central Bank’s use of interest rates in controlling the growth of the economy. Secondly, I will look at the meaning and purpose of QE, and finally, I will analyse the impact of the programme of QE recently launched by the European Central Bank.
The primary objective of the European Central Bank’s monetary policy is to maintain

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