This is interesting. The European Central Bank lent €442.2bn ($622bn) for 12 months to approx 1,100 banks at the ECB's current key rate of 1%.
What banks would do with this borrowed money? Of course, they will be buying government bonds. If they buy 10-year government bonds of Italy, for instance, they can get 350bp for 'free'.
Isn't this quantitative easing (or, queasing)? Yes. Isn't this same as the central bank buying government bonds? Very close.
What's the difference? The ECB still can claim they are more prudent than its peers (in a sense, they really are), while doing the same thing.
