2025/11/06 by David Bassens, Duncan Lindo · 1 voice
Economics, Econometrics and Finance · #Banking stability, regulation, efficiency #European Monetary and Fiscal Policies #Global Financial Crisis and Policies
paper · pdf · doi:10.1080/2833115x.2025.2573007
openalex created_date 2025/11/06 · openalex publication_date 2025/11/06 · openalex updated_date 2026/08/01
Draghi’s pledge to ‘do whatever it takes’, marked the end of the Eurozone crisis and a diminution of financial geographers’ attention to the mechanics of the Eurozone. But the European Central Bank’s work was just beginning. In 2012–2019 it undertook a massive balance sheet expansion, led by quantitative easing (QE) with the stated aim of increasing bank credit to the Eurozone to stimulate its economy, assuming an alignment of the monetary space of the euro and the geographies of bank credit allocation. We examine Eurozone banks’ securities holdings to understand both the destination and sources of credit allocation to corroborate these intended impacts. We find that monetary intervention has fuelled capital switching outside the Eurozone by its leading banks, predominantly to the United States. Rather than spatial alignment, QE has distorted banks’ risk/return metrics, lowering yields yet signalling continued Eurozone fragility. QE lowered Italian yields, yet its banks were among the largest relative capital switchers. These insights have implications for central bank policy, which appears to be fundamentally flawed by its reliance on uncontrolled large commercial banks for its execution.