Helicopter money is the new “whatever it takes”

Exactly seven years ago, the President of the European Central Bank, Mario Draghi, pledged the ECB would do “whatever it takes” to preserve the euro. Those few words will be remembered as a decisive step towards the end of the Eurozone crisis, as it paved the way for the launch of quantitative easing (QE).

But QE only managed to push the problem further down the road, and the ECB is once again worried about an economic slowdown. This month, the ECB has announced that it will consider more policy support to the Eurozone economy, including relaunching QE.

Some voices are saying the ECB should start buying equity stocks [1] as part of quantitative easing. This is what Blackrock (the world’s largest asset manager) suggested last week. Everyone can guess who would benefit most from this.

We, on the contrary, argue that 7 years after Draghi’s heroic “whatever it takes” speech, more of the same policies will not be good enough anymore. The European Central Bank needs to find new ways that will benefit all citizens, not just the banks, asset managers and the financial and corporate elite.

The ECB should clearly commit to deploying “helicopter money” – direct transfers of newly created money to EU citizens – if it needed to. Read why helicopter money is the new “whatever it takes” here.

In other news:

 

Ending the fiction: Central banks are not just technical institutions

Christine Lagarde has been proposed to become the next ECB President, but she faces critics for not being a trained economist and she has not worked for a central bank before. We argue this view is based on obsolete fictions about the nature of central banking. Read more here.

 

7 books on monetary policy you should read this summer

With the summer break comes more time for reading! The team of Positive Money Europe has compiled a list of books on monetary policy, banking and finance which are definitely worth adding to your reading list, if not straight in your luggage. Check it out here.

 

Ten reasons why Facebook’s Libra is a bad idea

European NGO Finance Watch released a highly sceptical initial assessment of Facebook’s plan to create a new global stablecoin. Read here.

They have also started a petition to stop facebook money as the Libra plans give rise to serious risks for would-be Libra users, for financial stability, and for democracy. Over 5,000 people signed the petition already. You can sign the petition here.