z1

Posted by : A 19‏/01‏/2015

Mario Draghi, President of the European Central Bank, ECB (AFP Photo / Daniel Roland)

The sovereign bond purchases could inject €550 billion ($650 billion), according to a survey of economist by Bloomberg News.


The bank meets Thursday and will make a rate decision announcement at 13:45 CET in Frankfurt, which will be followed by a news conference at 14:30 CET.


A non-standard monetary policy to purchase bonds and asset-backed securities is likely to be announced, and will include sovereign debt purchases, but not gold. It is very similar to the US stimulus scheme to ease the money supply.


READ MORE: 5 simple facts about US ‘easy money’


Declining prices and low growth have brought the EU economy, and its currency, to a sluggish stasis. Record low interest rates of 0.05 percent haven’t boosted the economy, either.


READ MORE: Euro hits lowest level in 9 years amidst Greece uncertainty



This extra cash liquidity measure in the banking system will be instead of the current support program known as “suspending sterilization,” which amounted to about €175 billion in weekly fund extractions from EU banks over the last 4 years. This money won’t disappear, but will stay in the banks, and possibly be leant out, thus stimulating growth.


Germany has been against the stimulus, as it believes it could further agitate highly-indebted EU countries, and the German authorities have argued the bond buying program is illegal. Under EU law it is illegal to finance governments and debt. However, the ECB is allowed to buy government bonds in the secondary market and the move wouldn’t be in violation of any eurozone law.


At December’s meeting, the ECB Governing Council said it will reassess the monetary stimulus package “early next year.”






source RT - Daily news http://ift.tt/1wm0Vr6

Leave a Reply

Subscribe to Posts | Subscribe to Comments

z2

Popular Post

Blogger templates

- Copyright © Zoom -RiwiZoom- Powered by Blogger - Designed by RiwiZoom -