Abstract: After the outbreak of the debt crisis in Europe, and when conventional monetary policy was confronted with the lower limit of zero interest rate and obstruction of transmission channels, European Central Bank implemented unconventional monetary policies primarily including debt monetization to relieve debt crisis. The research firstly clarifies unconventional monetary measures of European Central Bank during the crisis and then analyzes the mechanism and effects of these unconventional policies by a fix-effect model. Although unconventional policies are not fundamental approaches to managing debt crisis in the long term, unconventional monetary policies had positive influence on European debt crisis: these policies not only suppressed the long-term government bond yield, but also lowered commercial bank lending rates to corporations. In addition to this, the implementation of debt monetization also offers lessons and inspiration to local debt risks in our country.

Key words: European debt crisis, unconventional monetary policy, debt monetization, local debt risks