Mario Draghi, the president of the European Central Bank, will not be lacking in justifications for his revolution in monetary policy, when he presents details of the massive government bond-buying program on Thursday after a meeting of the bank’s governing council.
Europe’s economy is still very fragile. The inflation rate in the 19 countries making up the euro currency zone stood most recently at negative 0.3 percent, a long way from the ECB’s declared target of inflation just under 2 percent. Bank lending remains at a standstill in most southern European countries, and there is no evidence of a sustained recovery in Europe.
This is why Mr. Draghi can rest assured that a majority within Europe will support his plan to revive the economy by purchasing securities worth at least €1.14 trillion ($1.22 trillion), a plan known as quantitative easing that has already been carried out in the United States, Britain and Europe.
The announcement has also led to a sharp drop in the value of the euro against a range of other currencies. But it would seem that Mr. Draghi has little interest in the effects of this “quantitative easing” outside the currency zone.
In fact, the consequences are tremendous, as evidenced by the intense reactions of other central banks outside the euro zone since the ECB announced its program in January.