The ECB also "found" that QE which has led to record inequality and unprecedented social upheaval has "reduced inequality" https://t.co/fOsAqWaqhf
— zerohedge (@zerohedge) January 30, 2019
- In Bizarre Admission, ECB Warns Its Policies Threaten Financial Stability, Could Lead To A Crash
by Tyler Durden, https://www.zerohedge.com/
Is the world’s largest
hedge fundcentral bank finally starting to appreciate the devastating consequences of its asset reflating ways? In some ways it is almost ludicrous to presume that a central bank which at the beginning of the year laughably “found” that its QE has reduced inequality in the eurozone…
… may have finally looked in the mirror objectively, and yet on Wednesday, it was the ECB which admitted that historically low eurozone interest rates – which it is solely responsible for – and which are expected to persist into the foreseeable future (and beyond) are causing increased risk-taking that could threaten financial stability.
“While the low interest rate environment supports the overall economy, we also note an increase in risk-taking which could… create financial stability challenges,” ECB vice-president Luis de Guindos said non-ironically in a statement… which to us sounds an awful close to a mea culpa. Then again, we know that central banks never admit responsibility for “increases in risk-taking” so we wonder if he was just trolling everyone.
Or perhaps he isn’t: “Signs of excessive risk-taking” were spotted by the Frankfurt central bank among non-bank financial players like “investment funds, insurance companies and pension funds.” Indeed, many “have increased their exposure to riskier segments of the corporate and sovereign sectors” the central bank said. Of course, it is the ECB’s own policy of negative yields has prompted investors to seek out riskier bets in search of returns.