By Paul Taylor LONDON (Reuters) – The European Central Bank faces a crucial test their determination to do “whatever it takes” to preserve the euro when making a decision this week on buying government bonds to combat deflation and revive the economy. The advisor to the highest court of the European Union and the Swiss National Bank have paved the way for quantitative easing, or printing money, but the fierce opposition of the central bank of Germany, politicians and the public of this country could handcuff the ECB. Since the purchase of government bonds is not disputed by the bank, which has been widely anticipated, but how the program will be designed and whether it will be seen as credible and sufficient. The risk is that the institution has remained cohesive area of the single currency over five years of debt crisis relief adopt a plan to send the wrong signal to the markets, breaches its objective and jeopardize its credibility. The news that the ECB president, Mario Draghi, met privately with German Chancellor Angela Merkel last week highlights the enormous sensitivity policy decision. While the Bundesbank opposes the policy because it looks like a backdoor to finance irresponsible governments, creating potential liabilities for German taxpayers, the ECB hopes that Merkel did not censure and contain their conservative allies. Some who support the quantitative easing fear that Draghi made too many concessions to the Germans in framing a program that is limited in volume and dimension, which does not share excluding intra-border risks and buying bonds from countries with low credit ratings. A draft plan circulated this month between technical ECB limits purchases to 500,000 million euros. Some market analysts say that to achieve its objective, the program would have to double that size or unlimited. Continued …
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