Against this background, the ECB’s Governing Council has acted in a determined fashion to achieve price stability in line with the ECB’s mandate. The ECB’s monetary policy since 2014 relies on four elements: a negative policy rate, asset purchases, forward guidance, and targeted lending operations.
Because such flows are often driven by small differences in perceived rates of return at home and abroad, they could well be discouraged by a transactions tax. On the other hand, speculative flows that actually “bet” on a sharp movement in a currency, have rather large expected returns and are unlikely to be discouraged by the tax.