•  However, the balance of risks has shifted to the downside, as new risks stem from further slowdown in major emerging markets (China). The ongoing refugee crisis in Europe constitutes a potential risk, but will bring a fiscal stimulus outside of the restrictions of the EU Stability and Growth Pact.
For a central bank to set this mechanism in motion, it needs to hold a large stock of long-dated securities embodying duration risk. As a result of our reinvestment policy, these stock effects will continue to substantially compress term premia over time, even as our portfolio is set to remain constant.