The SAA has a large influence on the Bank’s financial risk profile, given foreign reserves comprise a large part of the Bank’s balance sheet. I will now describe the characteristics of each pool of reserves in more detail and the SAA as it applies to hedged and un-hedged reserves.
It buys time, but does not heal the structural causes of the sluggish economic recovery in the euro area and the persistently weak inflation trend. Like any medicine, the beneficial effects of monetary policy measures decline with continued use, while the undesirable side-effects increase.