Final Word from Tuesday, February 3, 2015

CNB Vice Gov. Mojmír Hampl told Týden in June 2011 that a central bank only starts buying government or corporate bonds when the situation is especially critical. Launching a policy of quantitative easing is like flipping the nuclear switch in time of war, he argued. After we called him on this in Nov. 2013 and compared the CNB's devaluation of the crown to quantitative easing, he hastened to point out the difference between setting a cap on a currency and buying bonds, but the result is in fact the same: An increase in the money supply. Now that the European Central Bank is planning its own bond-buying program, the CNB must decide whether to join it in flipping the nuclear switch again. If the CNB board votes this week to retain the cap on the crown, despite the ECB's foray into quantitative easing, it will basically be deciding to devalue the crown again. The last time the CNB did this, Czechs became outraged. [Czech Republic Czech National Bank governor]

Glossary of difficult words

to call someone on something - to challenge someone's statement; to ask someone to prove a statement he or she has made;

foray - a sudden attack or incursion into enemy territory, esp. to obtain something; to attempt to become involved in a new activity or sphere;

to become outraged - to become fiercely angry or shocked.

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