Exactly seven years ago, the President of the European Central Bank, Mario Draghi, pledged the ECB would do “whatever it takes” to preserve the euro. Those few words will be remembered as a decisive step towards the end of the Eurozone crisis, as it paved the way for the launch of quantitative easing (QE).
But QE only managed to push the problem further down the road, and the ECB is once again worried about an economic slowdown. This month, the ECB has announced that it will consider more policy support to the Eurozone economy, including relaunching QE.
Some voices are saying the ECB should start buying equity stocks  as part of quantitative easing. This is what Blackrock (the world’s largest asset manager) suggested last week. Everyone can guess who would benefit most from this.
We, on the contrary, argue that 7 years after Draghi’s heroic “whatever it takes” speech, more of the same policies will not be good enough anymore. The European Central Bank needs to find new ways that will benefit all citizens, not just the banks, asset managers and the financial and corporate elite.
The ECB should clearly commit to deploying “helicopter money” – direct transfers of newly created money to EU citizens – if it needed to. Read why helicopter money is the new “whatever it takes” here.
Mario Draghi first discussed the notion of ‘helicopter money’ in March 2016, saying “it is an interesting concept.” Since then however, the head of the European Central Bank repeatedly stated that the idea that central banks could distribute money directly to citizens, was fraught with accounting-wise, technical and legal complexity.” However the ECB had declined at several occasion to specify in detail which were the foreseen legal obstacles.
In a letter dated 29 November to Spanish MEP Jonas Fernandez, the ECB finally provides clarifications. And our interpretation of the letter lead to the conclusion that those legal issues are very weak and solvable.
The QE for People campaign praises the ECB for finally providing this legal clarification. “By providing a detailed answer on this point, the ECB acknowledges its understanding of our proposal, which many economists say could bring significant benefits to the economy” said Stan Jourdan, QE for People campaign coordinator.
Helicopter money must be designed as monetary policy
Eighteen members of the European Parliament have signed an open letter to the Head of the European Central Bank, emphasizing the need to consider “helicopter money” — a proposal to distribute money directly to people as a citizens’ dividend.
With Eurozone growth still sluggish, should the European Central Bank (ECB) consider a radical option – like helicopter money?
ING senior economist Teunis Brosens explains, in this eZonomics video, that the ECB has already employed quantitative easing and lowered interest rates below zero. But how effective these measures will be is unclear, he says.