| LONDON, March 31
LONDON, March 31 The European Central Bank could
give 1,300 euros to every person in the euro zone if it found no
other way to revive inflation, Nordea Bank said on Thursday.
The ECB has distanced itself from the idea of handing out
cash - so-called helicopter money - after its chief economist
said it was an option, in theory. The ECB is already spending
billions through its quantitative-easing programme to stimulate
the economy and ward off deflation .
"Helicopter money is not currently part of the discussion in
the Governing Council," ECB Executive Board member Benoit Coeure
said on Wednesday. "To be honest, I don't see how it could work
without some kind of risk-sharing with governments, which could
be practically and legally problematic."
In its most straightforward version, helicopter money would
involve central banks financing government stimulus programmes.
But the ECB is forbidden to do that, so Nordea believes it may
consider sending cash directly to the citizens of the 19 euro
"Go back a couple of years and QE buying of government bonds
seemed impossible for the ECB," said Nordea's chief fixed income
analyst, Jan Von Gerich. "We are increasingly in an environment
where central banks have to try something new."
Consumer prices in the euro zone continued to fall in March,
data released on Thursday showed, and renewed slide in oil
prices has reduced long-term inflation expectations to near
By Nordea's calculations, the ECB could afford losses of 444
billion euros, equal to 1,300 euros for each person. That's
based on the capital paid into the euro area's central banks by
national governments and the profits they have generated on
holding assets such as gold.
"This is the cap if they decide to write cheques directly to
citizens, because then they are effectively giving away money
for nothing and that eats away at their capital," Von Gerich
He added that the ECB could do more if it was prepared to
operate with negative capital, as some central banks in the
developing world have done, but that would threaten its
independence, since it might need to be recapitalised by
(Editing by Larry King)