Sovereign bond purchases and risk sharing arrangements: Implications for euro area monetary policy

The ECB has launched a Quantitative Easing programme similar to recent programmes launched by other central banks. In launching this programme, the  Eurosystem takes additional risks on its balance sheet. Currently, the probability of these risks materializing seems to be relatively small. Nonetheless, if this  probability were to increase, the ECB and national central banks may find  themselves under increasing political pressure, which in turn may weaken the  institutional structure underlying monetary policy in the euro area.