ECB mass bond-buying good for global economy: board member

The European Central Bank's raft of unconventional policy measures - including negative interest rates and mass bond-buying - have helped rather than harmed countries outside the eurozone, board member Benoit Coeure said Tuesday. "The view that asset purchase programmes in large advanced economies have encouraged harmful currency wars is misleading," Coeure said in a speech in Frankfurt.
Critics, notably US President Donald Trump's trade advisor Peter Navarro, have alleged that the ECB's policies have driven down the value of the euro against the dollar, giving EU exporters an unfair advantage over US competitors. In fact, Coeure said, looking closely at the impact on financial markets of the ECB's negative interest rates and bond-buying scheme revealed that they had spurred the global economy rather than sapping other countries.
The Frankfurt institution has set rates at historic lows and is currently buying 60 billion euros ($68.4 billion) of corporate and government bonds per month. The aim is to pump money through the financial system and power growth - in turn driving inflation towards the central bank's target of just below 2.0 percent. Policymakers believe the measures have successfully stoked the euro area economy, and in June upped their growth projections for the 19-nation eurozone for 2017-19.
Stronger economic growth in the eurozone means that it buys more from abroad, contributing to other countries' prosperity, Coeure argued. "Far from 'beggaring its neighbours', monetary policy easing by the ECB has added to global demand and thereby stabilised the global economy," he said. The euro area contributed 0.5 percentage point to average annual economic growth in advanced economies of 1.9 percent over the past three years, he added, a "much more significant" share than previously.
Furthermore, rather than being powered by exporting firms gaining larger market shares thanks to a cheap euro, "the recovery has been driven almost entirely by domestic demand, supported by a virtuous circle between rising employment, labour income and consumption" Coeure said.