Article by ForexTime
The European Central Bank’s announced on Thursday after a policy meeting that it will buy more than 1 trillion euros in bonds in an attempt to revive the Eurozone economy and help ward off deflation.
The ECB President Mario Draghi unveiled the new stimulus measures in a press conference and said that the ECB will purchase 60 billion euros a month in sovereign debt and other assets through at least September 2016. There were also implications that the QE could be open-ended.
The ECB will begin bond-buying this March and said national central banks in the Eurozone will shoulder the bulk of risk. The ECB Chief said only 20 percent of purchases would be the responsibility of the ECB. This means the bulk of any potential losses, should a Eurozone government default on its debt, would fall on national central banks.
It remains to be seen how effective the new QE program will be and if it will help to inflate risk assets in Europe and equities.
The euro tumbled in response the ECB measures and fell to a new eleven-year low of $1.1313 by early Friday trading. The overall effect of the ECB’s bond-buying progarm is a strengthening of the US dollar and equities.
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