This is followed by a more general analysis of balance sheet operations of central banks against the background of CBI in Chapter 6.

Chapter 5 offers a description and an interpretation of the policy responses of four leading central banks (Fed, ECB, Bank of England and Bank of Japan) to the Great Recession.

The ECB started its QE called the PSPP in 2015 as a new monetary policy measure. By purchasing vast monthly amounts of main Member State government bonds, the ECB aimed to force investors towards riskier assets, which in turn, was to increase asset prices and support bank lending, and ultimately lead to growth and inflation. Constitutionally, QE was a new type of complication for the European Macroeconomic Constitution. The ECB became the largest creditor of Member States it was prohibited to finance. The constitutional assessment of the PSPP combines the analysis of the CJEU’s Weiss case that contains very limited constraints for the ECB, and more economic-constitutional and thus substantive analysis. One key question is whether the PSPP is monetary policy, which can be analysed through its objectives, its economic content and examples of other central banks that mostly support an affirmative conclusion. The euro area constitutional structure adds further complications that were also raised in the FCC’s Weiss judgment. The PSPP has arguably broader implications for other areas of economic policy, as it facilitates Member States public finances and increases wealth differences by increasing asset prices, as well as making the ECB deeply dependent on Member States public finances.

In the wake of the recent financial crisis, Federal Reserve Chairman Ben Bernanke argued repeatedly that fostering healthy growth and job creation required legislative action. He warned that continued political battles over fiscal and monetary policy, financial regulation and the debt ceiling were “deeply irresponsible” and would have “catastrophic consequences for the economy that could last for decades.” At the same time, like Alan Greenspan before him, Bernanke joined secretaries of the Treasury and other technocrats in guiding and enabling legislation, helping presidents outmaneuver critics and compensating for political uncertainty when political battles between the President and Congress stalled economic legislation. Far from being apolitical actors, these technocrats manipulated authority, exploited deference from politicians and business leaders, and alternately bolstered and challenged national politicians in order to shape US economic policy, manage market behavior and coordinate global activities before, during and after the recent financial crises.