Enormously Expanded Balance Sheet Of The European Central Bank

Sometimes pictures say more than a 1,000 words.

The chart below shows the weekly total assets of the consolidated balance sheet measured in billions of Euro of the European Central Bank from its inception until June 15, 2012.

ECB Assets Almost Tripled

Since Beginning Of Financial Crisis

At the beginning of 2007, total assets of the ECB were at about Euro billion 1.200. About August of 2007, the financial crisis began to unfold.

ECB Balance Sheet Is Almost The Size

Of Germany’s Economy

Contrast this with the nominal GDP of the European Union, Germany, or France. Their nominal GDP measured in billion US dollar in 2011 was a rounded 17,600 for the entire EU, 3,600 for Germany, and 2,800 for France.

Thus, the fast expansion of the balance sheet of the European Central Bank is gigantic and whether this expansion can be reversed without inflation or other negative effects remains to be seen. The ECB is not alone, the Fed’s balance sheet has expanded in a similar way.