By Luke Ming Flanagan
This is a copy of the answer I received from Mario Draghi head of the European Central Bank on the following question. Strange how it was covered by half the worlds media but not by the Irish Times. They must have been busy looking for tabloid stories.
Treaties have made it impossible for the European Central Bank (ECB) to buy sovereign debt directly from Member States. However, the ECB could, at least, do so on secondary markets, in order to lower the averageinterest rate. Mario Draghi has promised a so-called ‘unorthodox’ monetary policy, suggesting implicitly that quantitative easing of sovereign bonds could be applied, but nothing has yet been seen. We sincerely need such an initiative in order to combat deflation in the eurozone: economists such as Paul Krugman have been recommending it for years, and a grassroots movement is building up which questions the general legitimacy of the ECB. When will the ECB decide to buy sovereign debt on secondary markets? How much would it buy, and during which periods and from which countries?