First, the programme entails a willingness to make huge and, in principle, unlimited use of the central bank balance sheet to reallocate insolvency risks among taxpayers in individual countries. In a monetary union with 17 sovereign member states, such decisions should be reserved for democratically elected parliaments.
Furthermore, as a central bank, we should keep ourselves at a safe distance from monetary financing of governments. Finally, moral hazard comes into play – the risk that governments’ willingness to reform will wane if, through the measures we take, we reduce the pressure on them to act. Will the ECB tighten the monetary reins again – even if this means jeopardising financial stability?