In the year 2000, ASEAN+3 countries mutually agreed to form a network of bilateral swap agreements to provide mutual protection from financial emergencies, popularly known as the Chiang Mai Initiative (CMI). The success of such an initiative is reflected in the recent proposal of the Asian Finance Ministers to double the size of the Asian Central Bank Swaps under the CMI.
The purchases of government bonds are intended not only to raise the rate of inflation, but also to encourage banks, in particular those in southern Europe, to again extend more loans to the corporate sector. Can that work? I have my doubts in that respect. Credit institutions in southern Europe are currently not suffering from a lack of liquidity.