Policy Alignment Between ECB Unconventional Monetary Policies and China’s Monetary Reforms—A Cross-Region Study

The triple shocks of the financial crisis, sovereign debt crisis, and COVID-19 pandemic have exerted significant impact on the financial markets in the Eurozone. Since the 2008 recession, the European Central Bank (ECB) has implemented an array of unconventional monetary policies (UMPs). These policies aim to address issues such as financing constraints and low inflation rates that the traditional monetary policy framework could not handle. The data indicated that when the ECB implemented its quantitative easing (QE) programs (e.g., the pandemic emergency purchase program), inflation in the Eurozone bounced back. It went up from −0.3% in August 2020 to 5% by December 2021. These measures prevented the pandemic from pushing the economy into a long-lasting deflation pressure. As the world’s second-largest economy, China’s monetary policy decisions play a crucial role in maintaining economic stability and fostering sustainable growth. This study examines ECB’S major unconventional monetary policy measures, evaluates their effects, and explores how these align with China’s monetary policy formulation and reforms. This research can provide useful insights for shaping monetary policy in the Eurozone and emerging economies such as China, especially during times of economic uncertainty.