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by chewz
2493 days ago
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QE transfered money to Southern countries with a caveat to use them to pay bondholders - large banks of the North. So in essence it was taking money from Northern taxpayers to give to Northern banks to save them from illiquidity. People in the South and their country budgets haven't seen a cent of these money. |
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1) QE did not transfer money with any caveat to pay bondholders. QE is not like giving cash to a country. The ECB buys up bonds on the open market (thus mostly from banks, which supports your point).
2) The buying up of bonds drastically reduces interest rates, because artifical demand is created.
3) The South can now borrow money for pretty low interest rates on high debt-loads. Italy wouldn't be able to afford high interest rates very long.
4) Northern banks holding higher paying bonds in their portfolio profited because the high-coupon bonds values increase.