The eventual winding up of the European Central Bank’s massive bond-buying program will create problems for highly indebted eurozone countries such as Italy and Portugal, the Greek finance minister said on Thursday.
Euclid Tsakalotos warned that their borrowing costs could surge when the ECB ends the now 80-billion-euro-a-month stimulus program it launched in January 2015 and which has driven down sovereign bond yields across the eurozone.
“Quantitative easing has problems and will not last forever,” Tsakalotos told a conference in Brussels.
The ECB has pledged to maintain its stimulus program until March 2017, and possibly beyond, to counter ultra-low inflation in the 19 countries of the currency bloc.
“It is very important that we remember that when QE does finish there will be a lot of economies that are now high-debt economies that will have a problem,” Tsakalotos told the Brussels Economic Forum.
“Interest rates of Portugal or Italy now reflect the fact they have got QE.”
Greece has so far not been a beneficiary of quantitative easing, but it aims to join the program soon after the conclusion of a reform review under a bailout program negotiated with eurozone lenders.