<p>Inflation rate for Eurozone in December 2015 <a href="http://ec.europa.eu/eurostat/statistics-explained/index.php/Inflation_in_the_euro_area" rel="nofollow">was</a> 0.2%. In November 2015 it was 0.1%. Meanwhile ECBs target is annual 2% and it seems that ECB does everything it can to push the inflation to the target. For example:</p>

<blockquote>
  <p>The ECB in December decided to lower the deposit rate by 10 basis
  points to -0.30% and extended the asset purchase programme until March
  2017 or "beyond if necessary". <a href="https://uk.finance.yahoo.com/news/eurozone-cpi-improves-line-expectations-103700849.html" rel="nofollow">Yahoo! Finance</a></p>
</blockquote>

<p>ECB probably wants to stimulate economic growth by causing inflation (?), but the question is what makes it fail? Greece is printing billions of euros, interest rates are lower than low, euro itself has devaluated dramatically. Why is that inflation still doesn't happen?</p>

CC BY-SA 3.0
2016-01-22T07:32:28.980Z
Greece is printing euros...? Can you source this claim? I think only the ECB can print euros.
Giskard
CC BY-SA 3.0
2016-01-23T03:00:10.210Z
@denesp ECB's new program allows for national central banks to purchase assets. But maybe there was an overstatement made.

The answer: The economy is doing pretty bad and a lot of delevereging is going on in the private sector. The aggregate money supply is not growing very fast even though the monetary base is (about 3 % a year). Also, do not forget that the money empirically mostly goes to prop up stock markets and especially the government bond market, not showing up in CPI.
Dole
CC BY-SA 3.0
2016-01-23T08:13:10.313Z
@Dole what do you mean 'purchase assets'? Financial bonds are not money. Also: if you think your answer is correct, post it as an answer?
Giskard
CC BY-SA 3.0
2016-01-23T11:26:31.557Z
@denesp  "As Barclays notes, during the same period over which Greek banks lost nearly €30 billion in deposits, banknotes in circulation jumped by some €13 billion." http://www.zerohedge.com/news/2015-06-20/meanwhile-greece-quietly-printing-billions-euros
jayarjo
CC BY-SA 3.0
2016-01-23T11:29:49.417Z
@denesp  "The ECB has the exclusive right to authorise the issue of notes within the Eurozone, but most notes are actually issued by the National Central Banks (NCBs) of the Eurozone. As of 2004, 8% of banknotes were issued by the European Central Bank and 92% were issued by Eurozone NCBs. The issuing central bank can be seen from the serial number. Each NCB is now responsible for the production of certain denominations, as assigned by the ECB." https://en.wikipedia.org/wiki/Euro_banknotes#Issuance_and_printing
jayarjo
CC BY-SA 3.0
2016-01-23T13:21:17.403Z
@jayarjo As you can import (put it into your valet and bring them accross the border) euro banknotes from other eurozone countries the increase in Greek circulation only signals the distrust in the banking system, not an increase in printing. From your second comment I am unable to see if the Greek NCB is printing "billions of euros" but I do see that any such action would have to be authorized by the ECB.
Giskard
CC BY-SA 3.0
2016-01-23T13:38:25.473Z
@jayarjo What you want to find data on (and I couldn't) is how the seigniorage revenue of the ECB is distributed among countries, specifically how much did Greece get in 2015. Many 2014 papers state that the ECB could alleviate the Greek crisis by allocating them a larger than normal share (normal share is proportional to the country's capital contribution to the ECB capital) but most papers also claim that this is unlikely. I also advise against reading Zerohedge as the piece you linked contained a clear logical fallacy. (I think the author knew but did not care, he needed the clicks.)
Giskard
CC BY-SA 3.0
2016-01-23T16:34:19.430Z
Greece has already printed tens of billions of euros "legitimately" under the Emergency Liquidity Assistance program. Now the question only is if it is ready to do it without ECB authorisation.
jayarjo
CC BY-SA 3.0
2016-01-23T18:37:23.847Z
@jayarjo Financial bonds are not money, but the central banks are buying those said bonds with newly created money. They can do this based on their capital key. It's the new type of "QE" in Europe.
Dole
<inflation><eurodollar>
Why is inflation rate so low in euro zone?
jayarjo
# Why is inflation rate so low in euro zone?

(Asked by: username_0 on 2016-01-22)

Inflation rate for Eurozone in December 2015 [was](http://ec.europa.eu/eurostat/statistics-explained/index.php/Inflation_in_the_euro_area) 0.2%. In November 2015 it was 0.1%. Meanwhile ECBs target is annual 2% and it seems that ECB does everything it can to push the inflation to the target. For example:

> The ECB in December decided to lower the deposit rate by 10 basis
> points to -0.30% and extended the asset purchase programme until March
> 2017 or "beyond if necessary". [Yahoo! Finance](https://uk.finance.yahoo.com/news/eurozone-cpi-improves-line-expectations-103700849.html)

ECB probably wants to stimulate economic growth by causing inflation (?), but the question is what makes it fail? Greece is printing billions of euros, interest rates are lower than low, euro itself has devaluated dramatically. Why is that inflation still doesn't happen?

**Tags:** inflation, eurodollar
> **Comments:**
> **username_1**: Greece is printing euros...? Can you source this claim? I think only the ECB can print euros.  
> **username_2**: @denesp ECB's new program allows for national central banks to purchase assets. But maybe there was an overstatement made.  The answer: The economy is doing pretty bad and a lot of delevereging is going on in the private sector. The aggregate money supply is not growing very fast even though the monetary base is (about 3 % a year). Also, do not forget that the money empirically mostly goes to prop up stock markets and especially the government bond market, not showing up in CPI.  
> **username_1**: @Dole what do you mean 'purchase assets'? Financial bonds are not money. Also: if you think your answer is correct, post it as an answer?  
> **username_0**: @denesp  "As Barclays notes, during the same period over which Greek banks lost nearly €30 billion in deposits, banknotes in circulation jumped by some €13 billion." http://www.zerohedge.com/news/2015-06-20/meanwhile-greece-quietly-printing-billions-euros  
> **username_0**: @denesp  "The ECB has the exclusive right to authorise the issue of notes within the Eurozone, but most notes are actually issued by the National Central Banks (NCBs) of the Eurozone. As of 2004, 8% of banknotes were issued by the European Central Bank and 92% were issued by Eurozone NCBs. The issuing central bank can be seen from the serial number. Each NCB is now responsible for the production of certain denominations, as assigned by the ECB." https://en.wikipedia.org/wiki/Euro_banknotes#Issuance_and_printing  
> **username_1**: @jayarjo As you can import (put it into your valet and bring them accross the border) euro banknotes from other eurozone countries the increase in Greek circulation only signals the distrust in the banking system, not an increase in printing. From your second comment I am unable to see if the Greek NCB is printing "billions of euros" but I do see that any such action would have to be authorized by the ECB.  
> **username_1**: @jayarjo What you want to find data on (and I couldn't) is how the seigniorage revenue of the ECB is distributed among countries, specifically how much did Greece get in 2015. Many 2014 papers state that the ECB could alleviate the Greek crisis by allocating them a larger than normal share (normal share is proportional to the country's capital contribution to the ECB capital) but most papers also claim that this is unlikely. I also advise against reading Zerohedge as the piece you linked contained a clear logical fallacy. (I think the author knew but did not care, he needed the clicks.)  
> **username_0**: Greece has already printed tens of billions of euros "legitimately" under the Emergency Liquidity Assistance program. Now the question only is if it is ready to do it without ECB authorisation.  
> **username_2**: @jayarjo Financial bonds are not money, but the central banks are buying those said bonds with newly created money. They can do this based on their capital key. It's the new type of "QE" in Europe.  

---

## 0 answers

