Mon, Aug 22, 2011 - 10:41am
Howdy people, I was hoping a rookie could get some help here.
So I read today on ZeroHedge (https://www.zerohedge.com/news/ecb-monetizes-€143-billion-insolvent-peripheral-debt-last-week-€111-billion-total) that the ECB has been buying government bonds again. How does that work? Do they print actual money which they use as payment and thus increase the monetary base?
What do they do with the bonds? Will the governments have to buy them back? Does the ECB then destroy that money?
The governments have to pay interest on the bonds, right? What does the ECB do with that money?
I guess this is the same for any central bank, but I just don't really understand how it works.
Edited by: Rogue on Nov 8, 2014 - 5:27am