CRI听力:No One Knows Where ECB QE Will Lead: Prof. Boot

Speaking with CRI following a seminar on the banking sector, Professor Arnoud Boot said the decision by the European Central Bank to purchase more bonds is a choice that it had to take.

"Let's be totally honest, we are out of equilibrium, we are totally out of the track, So you see this massive QE in the US, in Japan, in Europé, in that sense, that means in the long term we will come back to stability, and no one knows. QE is something you have to do it, because otherwise everybody else do it. You are forced to devalue your currency, look at Switzerland, because of the QE around the world, everybody brings the money into Switzerland and Switzerland becomes non competitive. "

Boot says Quantitative Easing in Europe is more complicated because there are 18 countries in the Euro zone, and Quantative Easing means each will be buying government debt. It also means that countries are going to finance each other.

He says there are political conflicts too, because if the North of Europe feels the south is subsidized, politicians might get complaints from voters. So it will be difficult to get consensus within Europe.

But Boot stressed that political stability is very important and European countries should help each other.

"You want stability in that part, and Greece is a democracy, they have developed a very short period, so they deserve our help."

He says Greece's problems are due not only to their own mistakes but also due to the fact that they buy a lot of products from Germany. So all sides should work together.

But Boot is not sure that the QE measure is the cure for the EU or the world.

"The QE experiment in the whole world, we don't know what we are going to do and what it is doing and what is being helpful and what is not being helpful."

As for the impact on China, Boot believes that this will cause the Chinese yuan to appreciate.

Last week, the European Central Bank announced it would expand bond purchases every month beginning in March, ending in September of next year.

For CRI, this is Chen Xuefei reporting from Stockholm