The ECB will purchase a monthly €60bn of private and public debt instruments between March 2015 and September 2016 – a total worth over €1 trillion. While the timing and size of purchases are known, there is more leeway than it seems in the way purchases are allocated to each category of assets.

Instead of buying sovereign debt, the ECB could broaden further its purchases to include equity of all sorts. Fuelling an equity bubble is no worse than fuelling a bond one. It can be mitigated by intervening secretly and including non listed securities. Inhibitions to take risk should be lifted.

The ECB has confirmed its determination to counter the risk of deflation in the eurozone by evoking the possibility of sovereign bond purchases, but is confronted once again with the heterogeneity of the area. The need for compromise could jeopardize the effectiveness of its action.

For a long time considered as impossible to implement, the negative interest rates on deposits of commercial banks at the central bank is now often mentioned as an option for the European Central Bank (ECB).

The last 5 years have been a major challenge for the theory and practice of monetary policy. The key channel of conventional monetary policy has been severely impaired and the target policy rates in some countries have approached zero.

Restoring the smooth functioning of the interbank markets was a key objective for Mario Draghi when he became president of the ECB. One year and two LTROs later, the ECB reached its target.

On Thursday July 5th the ECB decided to cut its main refinancing rate to 0.75%, for the first time crossing the historical low of 1%. More importantly, it reduced the overnight deposit facility rate to 0%. In doing so, the ECB encouraged banks to transform the liquidity received via two 3-year LTROs into credit to companies and households, instead of keeping it at the ECB deposit facility.