The European Central Bank (ECB) has incurred billions in losses as a direct consequence of its bond purchasing program, which was previously adopted as a crisis management tool. Economists had warned against the use of such measures; however, the ECB proceeded due to the immediate need for intervention during turbulent economic times.

Currently, the academic consensus regarding bond purchases is more nuanced. While some experts recognize their value during extreme economic crises, there is increasing skepticism about the long-term cost-effectiveness of using bond purchases as a monetary policy tool. The side effects of these purchases are considerable and have begun manifesting, particularly noticeable in the rise of inflation post-pandemic, forcing the ECB to reconsider and ultimately taper its bond-buying activities.

As the ECB navigates these challenges, it is essential for policymakers to engage in a more profound examination of the consequences related to extensive bond purchases. The existing financial distortions and the anticipated inflationary pressures indicate that previous strategies may no longer be sustainable, calling for a shift in the approach to monetary policy if the central bank is to regain stability in the economy.