Bank of England Official Says QE ‘Not Ideal’ in the Longer Term

The Bank of England’s main program to stimulate the economy is “not ideal in the long run,” an official overseeing threats to the banking system said.

Alex Brazier, the U.K. central bank’s executive director of financial stability, identified the quantitative easing program as a potential risk. Under the measure, the bank buys bonds in markets to keep a lid on interest rates.

“It sends a signal to the market that whenever people are struggling for cash, don’t worry we’ll come in and buy gilts,” Brazier said in an interview with the Sunday Telegraph. “This is a major area, I think, of unfinished business in financial stability. Over the past 10 years, the system’s developed a lot (and) shifted away from banks towards non-banks. On balance, that’s good, but we’ve caught a glimpse in March of how, without proper development of regulation and infrastructure, things can go wrong.”

The bank plans to purchase about 150 billion pounds ($209 billion) of bonds this year, bringing to 895 billion pounds the value of securities it has scooped up since the last financial crisis more than a decade ago.

Brazier is a member of the BOE’s financial policy committee, which assess risks to the banking system. His term ends on March 31.

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