Frankfurt (AFP) – If the ECB distributed money directly to households to restart inflation? Heresy for many, the idea is “interesting”, recently acknowledged the president of the institution Mario Draghi, delivering up to date an old debate.
In 1969, the American economist Milton Friedman imagine a radical method to fight against deflation: a helicopter dropping from the air ticket mountains on cities, to inflate the wallets of consumers and encourage them to spend more, thereby increasing prices. Thus was born the concept of “helicopter money” or “helicopter money”.
“This is a very interesting concept (…) but we did not really studied,” said against all odds Draghi last week in a press conference. Heterodox and controversial monetary helicopter has never been widely used in modern history.
About Draghi were enough to ignite speculation about the use of such a tool at the time, everywhere, doubts are growing as to the effectiveness of monetary policy to push up prices.
“the monetary helicopter is currently the subject of intense discussions in academia and central banks, “said Marcel Fratzscher, president of the German DIW economic institute. “It would be, however, an instrument of last resort, if nothing else was working”
-. “175 euros per month per citizen” –
Free Loans for giants banks, massive purchases of market debt via the “QE” program, at the lowest rates, the ECB, as his Japanese colleague moreover, has worked hard the past two years to try to raise prices.
watering costs money to banks, the ECB hopes boost lending to households and businesses and boosting growth. In Europe, the financing of the economy almost exclusively through bank credit.
But for three years, inflation is consistently below the target rate of “close to but below 2%”, definition for the ECB’s price stability. Ballasted by the erosion of oil prices, prices actually fell over one month in February.
The lending rising only very slowly, much of the money poured by the bank Central remains stuck in the pipes of the financial system, but failed to consumers.
the use of helicopter money would bypass the banks to pay money directly into the pockets of households.
If the sums currently injected by the ECB “were distributed among all the people of the euro area, every citizen could receive up to 175 euros a month,” argued the collective “QE for people”, a combination . ‘associations and economists favor this measure
– Legal difficulties –
in practice, monetary helicopter can cover countless forms: distribution of vouchers to citizens to spend in stores, the investment program or tax cut, all financed by the central bank.
Michael Malquarti economist of the Swiss bank SYZ pleads for his many years for the Swiss national Bank (SNB) can pay money directly to citizens via the health insurance system of the country.
“I would like to see Switzerland as a pioneer in this field. it could bring down a psychological barrier, “said Mr. Malquarti AFP.
But in the eurozone, where live 19 states and different tax systems, the implementation of such a measure faces in major technical, logistical and ethical difficulties not to mention the legal obstacles. if nothing prevents in principle the ECB to pay money to citizens, EU treaties prohibit other hand formally to him directly finance governments <. / p>
“So far, to have money, it was usually win. If the ECB began to distribute money without consideration, it would be a huge upset of economic habits and put the market economy in danger, “Jörg Krämer also advanced, economist at Commerzbank.
But “if all else fails, the debate about monetary helicopter will take the next step,” judge his colleague Christophe Rieger.
Jonathan Loynes, economist at Capital Economics, “the lesson of recent years is that policies that seemed unimaginable can become reality. “
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