The problem with central banks' massive bond-buying programs is that if consumers and businesses fail to borrow money to stimulate economic growth, the policy is rendered mostly "useless," one Nomura economist said Friday.
The U.S. and U.K. embarked on asset-purchase, or quantitative easing (QE) programs, following the 2007-2008 global financial crisis. Japan joined the QE club in 2013 and the European Central Bank began its 1 trillion euro ($1.06 trillion) bond-buying stimulus this week.
"Both the U.S. and Europe are facing the same problem– which is that we are in a situation where the private sector in any of these economies is not borrowing money at zero interest rates or repairing balance sheets following what happened in the crisis," Richard Koo, Chief Economist at the Nomura Research Institute, told CNBC on the side lines of the Ambrosetti Spring Workshop in Italy.
"When no one is borrowing money, monetary policy is largely useless," he added.