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Olivier Blanchard x.com
It is indeed nitpicking, and the effect is a net decrease in demand, and a decrease in reserves. But, yes, I should have been more precise. The ECB indeed not selling, it is letting bonds mature and not buying new ones: this leads to a steady decline in ECB bond holdings and in reserves by the ECB. It intends to do so so long as banks do not come back to hold more reserves. The plan is that, when banks come back, this will determine the amount and the size of the balance sheet. Bottom line. The ECB is doing this for reasons which have nothing to do with fiscal policy. And this has nothing to…
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