ZEW: ECB is creating dangerous bubbles

|By:, SA News Editor

The German think tank ZEW has outlined their growing concern of dangerous bubbles after the European Central Bank cut interest and deposit rates last week and hinted at quantitative easing.

"I've got a bad feeling about this...I am concerned by the danger that the ECB is producing new bubbles with its policy of cheap money," says Clemens Fuest. "We have all the ingredients of a bubble: The prices of real estate and stock markets continue to rise, and on the bond markets, yields are falling despite high risks."

To overcome the crisis, Fuest proposes action from governments in Europe, and not to leave structural reforms only up to the ECB.