ECB Has Run Out of Bunds to Buy, Says State Street’s Metcalfe

The transcript discusses the European Central Bank's (ECB) challenges in implementing further stimulus due to limited bond availability and negative yields. It explores potential strategies, such as following the Bank of Japan's path by purchasing equities or ETFs. The conversation also touches on the euro's undervaluation and how it could be a policy lever for the ECB, despite President Trump's criticism of currency manipulation.

What is a major challenge the ECB faces in implementing quantitative easing?

• Strong economic growth

• Excessive government spending

• High inflation rates

• Lack of available bonds to purchase

What unconventional strategy might the ECB consider to stimulate the economy?

• Raising interest rates

• Purchasing equities or ETFs

• Increasing taxes

• Reducing government debt

What is the capital key, and why might it be changed?

• A rule determining bond purchase limits, which may be altered to increase flexibility

• A currency exchange rate, which might be modified to enhance trade

• A measure of inflation control, which might be adjusted to stabilize prices

• A tax policy, which could be revised to boost revenue

According to President Trump, how is the euro currently valued?

• Undervalued by 10%

• Overvalued by 20%

• Correctly valued

• Overvalued by 10%

What tool does the ECB have that could indirectly encourage a weaker euro?

• Implementing stricter fiscal policies

• Increasing interest rates

• Encouraging a weaker euro through policy levers

• Reducing quantitative easing