Euro zone central banks have quietly bought hundreds of billions of euros worth of assets over the past decade using an obscure facility that allows them to print some money for purposes other than monetary policy, an academic study has revealed.
While the European Central Bank's 1.5 trillion euro ($1.64 trillion) quantitative easing programme is well known, the existence of this separate scheme to buy bonds and other assets was first publicised this week by researcher Daniel Hoffmann.
His study - part of his PhD thesis and now published with a foreword by Hans Werner-Sinn, one of the ECB's harshest critics in the German public debate - has intensified criticism in Germany of the euro zone central bank's lack of transparency.
Total assets held by national central banks (NCBs) beyond their normal monetary policy operations swelled to 623 billion euros late last year from 214 billion in 2005, according to Hoffman, who aggregated data from NCBs' balance sheets.
The study raises questions about NCBs' use of this scheme - which is meant for non-monetary purposes, such as the management of central banks' pension funds - especially during the 2008-12 financial crisis, when rising government bond yields pushed several countries to seek financial assistance.
The purchases picked up significantly in the crisis years, especially those by the central banks of France, Italy, Greece and Ireland.
"I see no problem in being more transparent on this matter," ECB executive board member Peter Praet said in a Handelsblatt interview published on December 10. "But the decision has to be taken by the Governing Council."
The ECB said on its website that no "uncontrolled money creation" can take place using the facility, known as Agreement on Net Financial Assets (ANFA), because there is a cap on how much each NCB can buy to prevent it from interfering with monetary policy.
But these limits are not published, and while NCBs have to inform the ECB of what they buy, not all of them make such details public.
The research found that assets classified as "other securities" in the balance sheet of national central banks, which are those purchased with self-created money, jumped from 122.6 billion euros in 2005 to 374.9 billion euros in 2014.
They now stand at 358.2 billion euros, according to the consolidated financial statement of the Eurosystem. "This increase in volume almost entirely escaped the public eye," Hoffmann said in the study.