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Warning! Volatility may await if ECB launches QE

One of Europe’s most influential economists has warned that the quantitative easing measures seen being unveiled by the European Central Bank (ECB) this week could create deep market volatility, akin to what was seen after the Swiss National Bank abandoned its currency peg.

“There was so much capital flight in anticipation of the QE to Switzerland, that the Swiss central bank was unable to stem the tide, and there will be more effects of that sort,” the President of Germany’s Ifo Institute for Economic Research, Hans-Werner Sinn, told CNBC on Monday.

In a chaotic few minutes after the Swiss central bank’s announcement on Thursday, the Swiss franc soared by around 30 percent in value against the euro and 25 percent against the U.S. dollar. The move also hit equity markets hard, with the Swiss benchmark stock index falling by more than 10 percent on the day at one point.


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