However, I would like to emphasize another important background factor, that is, demographic change in the form of population ageing. Indeed, the “bubble and burst” and subsequent financial crisis seemed to coincide roughly with the turning-point of population pyramids in Japan, the United States, and Europe.
At face value, this suggests one tentative conclusion: large-scale purchases of sovereign bonds encouraged some investors to rebalance their portfolios towards the closest substitute – bonds issued by other sovereigns. This could be described as textbook quantitative easing (QE)[3], not least because these flows likely reflect the impact of our measures on bond prices in the euro area.