Actionable news
All posts from Actionable news

Helicopter Money Not On The Table, Says ECB Economist

ECB Chief Economist Peter Praet, pictured in Frankfurt in March last year, said Thursday that...

FRANKFURT—The European Central Bank isn’t discussing so-called helicopter money, two top ECB officials said on Thursday, distancing themselves from a novel concept that is touted by some economists as a solution to the eurozone’s ultralow inflation.

Helicopter money—a form of stimulus which involves direct distribution of money by central banks to the public—has risen to prominence in recent months as central banks across the advanced world seek new ways to drive up stubbornly low inflation and convince investors they haven’t run out of policy ideas.

However the policy is “not on the table, it’s not even discussed” by the ECB’s 25-member governing council, the bank’s chief economist Peter Praet told an audience in Germany.

Helicopter money essentially involves a central bank handing money directly to citizens. Like quantitative easing, it involves the central bank printing money; however, whereas the money printed under QE is used to buy debt and other securities, helicopter money is given directly to the public to spend on goods and services. A bit like a national bank handing out a check to everyone in the economy. It is also a permanent transfer of cash, while QE is supposed to be temporary.

The concept is named after an essay by American economist Milton Friedman, who broached his idea by saying “let us suppose that one...