Frankfurt
The European Central Bank launched its strongest effort to date to try to revive the flagging regional economy: A program to buy government and private bonds for 1.1 billion euros from March.
The expected program was an emphatic demonstration of the willingness of the central bank to do everything I can to rejuvenate the economy shared by 19 countries that use the euro. It also showed the multinational available to the ECB to assert independence to criticism in Germany, the largest and most politically influential in the eurozone country.
The ECB explained that combine Cart government bond with an existing minor program which acquires private bonds totaling 60,000 million euros per month until September 2016. In total, the program will amount to 1.1 billion euros (1.16 billion dollars).
By injecting money into the banking system of the euro area, European program seeks to lower the credit and enable businesses to invest, grow and hire.
The dimension of the program exceeded the expectations of investors and ECB President Mario Draghi promised to keep it until the central bank sees “sustained adjustment” in the rise of inflation on levels that are dangerously low, in other words, time necessary.
OPERATION. In the US, the Fed made a similar promise to launch a program of bond purchases, which already concluded, and who is credited with helping to revive the US economy.
A LOW. The euro fell immediately after the announcement of the ECB before the picture that the new currency will lower the value of the currency. A devalued euro cheaper European exports.
Prices. There are fears that the eurozone could face a chronic period of falling prices, or deflation, which could cripple the economy. This problem afflicting Japan, the third largest economy in the world.
FEAR. There is no guarantee that the European bond purchase program succeed if national governments do something else in the euro area.
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