German Experts Call for End to Quantitative Easing

As many countries around the world struggle with the question of allowing interest rates to rise from artificially low points, Germany’s Council of Economic Experts has advised that quantitative easing programs should be ended in order to prevent the possibility of a new financial crisis. The Berlin based group, consisting of five prominent members from the financial and economic fields, made the statement in its annual report, which was released on Wednesday.

According to the report, consistently low interest rates have created conditions of economic instability, as well as encouraged unusually risky investment. “Monetary policy is leading to a build-up of risks to financial stability which could pave the way for a new financial crisis,” the council wrote in its report for German Chancellor Angela Merkel. The group advised that the European Central Bank reduce its bond buying program and allow interest rates to rise as soon as possible. Acknowledging that damage has already been done, the advice was given on the basis of preventing further buildup of undue financial risk.

The report comes just one month before Eurozone financial policymakers are expected to meet to discuss the future of quantitative easing. Rather than an end to the program, however, the December meeting is expected to discuss further cuts to interest rates and a further €1.1 trillion in bond purchasing and stimulus measures. At around the same time, the United States Federal Reserve is once again expected to take up the question of allowing interest rates to rise. In the case of the Federal Reserve, however, there is much optimism that the group may at last be ready to put an end to quantitative easing.