In fact, low interest rates and abundant liquidity may encourage investors to take excessive risks. Among other things, we keep a close eye on how much risk banks take. Another issue is that bond purchases by the central bank can reduce liquidity in the relevant markets or distort prices.
The more bonds we buy, and the longer we go on buying, the greater the risk that prices will be distorted. That is why we took steps to limit some of the side-effects of the ECB’s bond purchases. Furthermore, our actions had to be guided by careful monitoring of the markets that were likely to be most affected.