Is ECB's QE an expansionary measure?

There is no doubt that there will be one thing one can expect from the ECB rate meeting and above all the following press conference on Thursday, and that is that 

After ECB rate meeting, the Bank is expected confirm its willingness to extend its bond purchasing program. This prospect puts permanent pressure on the euro. 

One reason could be that the bond purchasing program does not act like an expansionary monetary policy but like a restrictive one. The majority of readers is likely to hesitate at this juncture, as it is generally accepted that a central bank's QE program acts like an expansionary monetary policy, as it floods the market with liquidity. 

In the case of the ECB program there is another decisive factor though, that did not apply in this form for any other central bank with a QE program: the negative interest rates on excess reserves. At the moment commercial banks have to pay penalty interest rates of 0.20% on excess reserves. So the higher the excess reserves the higher the pressure on the banking sector. 

Barclays notes, theoretically only two possibilities to prevent the rise in excess reserves: 

• 1) the additional liquidity could be held in cash. However, anyone trying to imagine the sums involved will realise immediately that this is not really a possibility, in particular as holding cash involves costs. 
  
  
• 2) the banks would be able to avoid additional excess reserves if they enhanced lending. However, that is exactly the problem: even before the start of the QE program the European banking sector held excess reserves of approx. euro 130bn. on which it paid penalty interest rates.