German Chancellor Angela Merkel will not have a vote when the European Central Bank’s governing council meets on Thursday to decide whether to launch an unprecedented program to buy hundreds of billions of euros in euro-zone government debt.
But the head of Europe’s largest economy still holds tremendous weight. So much so that the ECB’s president, Mario Draghi, travelled to the Chancellery in Berlin last week to present his latest controversial ideas for how to save the 19-country euro zone from economic stagnation.
It seems a foregone conclusion that the Frankfurt-based ECB will formally announce its quantitative easing program on Thursday, a U.S.-style monetary policy step designed to lower long-term interest rates and prevent the euro zone from falling further into deflation, but which has never before been carried out in the euro currency bloc.
Central banking sources said the first purchases of government bonds could come within 14 days. Financial markets have also widely priced in the move, and economists estimate the ECB will aim to buy as much as €700 billion in total over the coming years. The purchases would be spread across all of the euro zone’s 19 member states.