QE in CEE: What you need to know

Central banks in emerging Europe have started buying local government bonds in response to the Covid-19 crisis. Has quantitative easing arrived in the region? And, if so, will it work?

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Until very recently, bond buying by central banks was a phenomenon limited to the world’s largest and most advanced economies. As the Covid-19 crisis has deepened, however, policymakers in smaller and less developed markets have taken a leaf out of their book.

The epicentre of this new trend is central and eastern Europe. Recently, central banks in Poland, Romania, Croatia and Hungary have all bought local government bonds in the secondary market.

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