ECB Unconventional Monetary Policy: Market Impact and International Spillovers

This paper assesses the financial market impact of ECB unconventional monetary policy between 2007 and 2012. The paper looks at a broad range of asset prices and portfolio flows in the euro area and globally, using data at daily frequency. It finds that ECB policies boosted equity prices and lowered bond market fragmentation in the euro area. Spillovers to advanced economies and emerging markets included a positive impact on equity markets and confidence. The effects of ECB policies on bond markets outside the euro area were negligible. ECB policies also lowered credit risk among banks and sovereigns in the euro area and other G20 countries, while there is limited evidence of portfolio rebalancing across regions and assets on impact.