European Central Bank headquarters in Frankfurt

Central banks and corporate bonds

  • Expanding so-called QE to corporate bonds is unlikely to boost private investment
  • The debt purchases may be a pilot program by the ECB to bail out key industries
  • The program gives Brussels a useful carrot to encourage corporate compliance

Late in the 20th century, the role of central banks as a safety net for the banking industry became stronger. If a commercial bank ran into trouble, it was widely believed that the central bank would step in and offer all the (paper) money required to ward off a liquidity crisis, bankruptcy and contagion.

Recently, however, the range of the beneficiaries has grown larger. Governments now rely on central banks to buy their bonds at relatively high prices, regardless of the risk profile involved. And this year the European Central Bank and the Bank of England both committed themselves to buying substantial quantities of bonds issued by large corporations.

This report analyzes the traditional views on these corporate-bond purchases, puts forward two alternative explanations for these operations, and presents possible scenarios for the not-too-distant future.

Unlock the report
8.95 EUR
 
Secure, instant payment by credit card or bank transfer
Professor Enrico Colombatto
There is simply too much sovereign debt outstanding to believe that buyers cannot find enough of it
read more about it in the report
What's inside
  • Expanding so-called QE to corporate bonds is unlikely to boost private investment
  • The debt purchases may be a pilot program by the ECB to bail out key industries
  • The program gives Brussels a useful carrot to encourage corporate compliance
Who will benefit?
  • Report is targeted to the decision makers in cross country manufacturing – suppliers, manufacturers, logistics.
  • Also considered useful for the administrative university facilities, to better understand the possibe effects of current decisions.
By clicking "I Agree" below, you acknowledge that you accept our Privacy Policy and Terms and conditions. Feel free to check out our policies anytime for more information.
I agree