He made ECB bond purchases conditional on countries formally requesting these purchases (through the EFSF/ESM) and abiding by a set of conditions.
When the announcement was made, ECB managing director Paul Downton said: "The time is right to rebuild not only the team but also the team ethic".
The eurozone's answer is a new permanent banking union, making the ECB the single supervisor of Eurozone banks, alongside a banks resolution authority – and perhaps eventually a common Eurozone system of guarantees for depositors.
The core countries like Germany are doing really well and that's keeping the euro strong, and it's making the ECB [European Central Bank] more inclined to tighten policy". He added that what the countries on the periphery really needed was low interest rates and a weaker euro.
If Greece were to be thrown out of the EU for defaulting, the ECB would have to write-down that debt to zero and that would make the ECB technically insolvent.
That will make the ECB reluctant to cut rates even if the economy dips into recession.
If the result is to tip the euro zone into deflation, will that make the ECB act?
One option would be to introduce negative interest rates.Such a decision would make the ECB the first big central bank to move into negative territory.
This makes the ECB a mere member of the "institutions" (inverted commas in Blockupy's original), and so an integral part of the problem, whatever its differences with German leaders.At a previously scheduled press conference in Berlin, Wolfgang Schäuble, the conservative finance minister, and Sigmar Gabriel, the centre-left economy minister, made the point themselves.
Long-standing German antipathy to the policy, however, has made the ECB a late adopter.In this section The economics of optimism Accentuate the negative Better late than never Connect 450 Bigger and better Swiss miss The wrong yardstick Oily and easy Berated Broke but never bust ReprintsThe central bank is turning to QE because of the enfeebled state of the European economy.
