ECB QE Agenda

Market analysts and traders are expecting the European Central bank to go ahead with its "quantitative easing" program and use up more than 500 billion euro to acquire government bonds using the common currency.

ECB Chair Mario Draghi has been hyping all along that this plan will be instrumental in saving the very weak regional economy.

The economy is struggling. EUROSTAT disclosed that current unemployment rate has reached 11.5%. Euro zone growth in the euro zone is below one percent. On top of these, the EU is going through precarious drop in prices urging consumers to hold back on purchases and investments which bring down economic activities.

The ECB is pinning its hopes on QE which the United States used in getting out of the 2009 depression. What the Fed did was to purchase government bonds worth hundreds of billions of US currency. The ECB wants to follow the footsteps of the United States. Once it buys bonds from the private business sector, it hopes that the private sector will use these funds to take risks like getting more assets and loans.

One problem is Germany (the most dominant economy in the EU) detests the idea. It believes that governments must concentrate on debt reduction instead.

The euro area contains many structural defects that preclude healthy growth such as a currency shared by many countries. Another is the continuing campaign to trim down spending. Yet, the ECB still hopes to infuse more money into the whole system and turn things around.