What if you held an auction to sterilize the proceeds from your bond buying program and the market did not tender the necessary funds for you to drain? Well, you’d be engaging in the dreaded quantitative ease.
The ECB is ultimately headed in that direction anyway, better to just cut to the chase and bag the sterilization.
At the December ECB meeting, Draghi and company are expected to extend loans to banks of up to 2 years and perhaps more, up from the longest refinancing arrangement of 13 months announced two meetings ago. All of that lending is a form of QE, so don’t be fooled that the ECB is somehow more virtuous than the rest of the central banks in the world. It’s printing money too…and it looks like it will print trillions more in the years ahead.