There is wide coverage ahead of today’s ECB Governing Council. Reports say that the ECB is making its final choice on the purchase of €50 billion worth of governments bonds per month for at least a year. Leaders and commentators stress how important this day is.
The Guardian quotes Mr Renzi urging the ECB to help the eurozone on to new path from Davos. Italy’s prime minister has said the ECB could “help Europe give a message of a new economic direction.” The Independent says bankers, officials and economists lined up at the World Economic Forum to urge the European Central Bank and its president, Mario Draghi, to commit to €1trn of quantitative easing today.
Vice President Dombrovskis expressed the Commission’s support for the ECB’s actions in an interview with Rai 24. In La Croix’s editorial, François Ernenwein says that the ECB is about to take a turn today: “What may appear as a simple technical adjustment [will] however be an important qualitative leap.” Among the comment pieces supporting the ECB’s actions,
The WSJE sympathises with Mr Draghi, who is being asked to substitute for the failure of Europe’s political leaders to reform their economies. In 2012 he promised to “do whatever it takes” to preserve the euro, and on that point he succeeded. What he hasn’t been able to do is revive growth in the Eurozone.
Taking a UK perspective, The Evening Standard columnist Anthony Hilton claims that QE in the eurozone could have the unintended consequence of benefiting the UK property market if wealthy Europeans decide to protect their assets by investing in London.
Among the more sceptical comments towards the ECB’s actions, are several German analyses. Jörg Rocholl writes for Handelsblatt that the problems will not end here, as the decision would be a huge risk and motivate banks to continue their harmful behaviour. The decision will especially benefits banks that do not have a viable business model. Le Figaro wonders if the ECB really is ready to do “whatever it takes” today.
According to many Davos participants, such as Axel Weber, the IMF’s Min Zhu, and Paul Singer, this is unlikely. Les Echos’s Isabelle Couet says its impact is likely to be limited. She especially worries that the ECB is acting alone: the eurozone governments must support the ECB’s action and above all be aware that it is playing its last trump. The Times’s financial editor Patrick Hosking likens the policy to “pushing on a piece of string” and claims that it fails to deal with the real problem of the eurozone, which is what he dubs “a paralysing lack of confidence” that deters companies and households from spending.
Fellow FT analyst John Authers argues that the ECB has failed to make use of the weapon of “surprise”, arguing the best way to positively affect the markets is to “shock” them. © European Union, 2015
