'Qualitative easing' funds go to foreign holders of gilts
In an unprecedented attack on the world's central banks, the German Chancellor, Angela Merkel, has called on them to end their current "unconventional" monetary polices - expanding money supply though purchases of government and private sector bonds.
Mrs Merkel suggested that the central banks may end up doing more harm than good. She told a conference in Berlin: "What other central banks have been doing must stop now. I am very sceptical about the extent of the Fed's actions and the way the Bank of England has carved its own little line in Europe," she told a conference in Berlin. She said she views "with great scepticism what authority the Fed has and the leeway the Bank of England has created for itself."
The attack on the US Federal Reserve and the Bank of England shocked many observers. More radical still was the assault on the European Central Bank. Ever since the foundation of the Federal Republic 60 years ago, no German leader has publicly rebuked the Bundesbank or its successor, the European Central bank. Freedom from political independence has been a cornerstone of economic policy for decades, yet Mrs Merkel was unabashed and unrestrained: "Even the European Central Bank has somewhat bowed to international pressure with its purchase of covered bonds. We must return to independent and sensible monetary policies, otherwise we will be back to where we are now in 10 years' time."
On Thursday the ECB is expected to unveil details of its programme to buy covered bonds, securities "covered" by a dependable source of income and collateral behind them. It is the ECB's version of the more extensive "quantitative easing" pursued in recent months by the Bank of England and the US Fed. …