Tomorrow’s likely decision of the ECB to launch a quantitative easing programme (QE) continues to receive widespread coverage in today’s European press. Doubts and critics are still being reported. L’Express’s Jacques Attali writes in his weekly column that Frankfurt’s expected move would be welcome but that it will not have a sustainable effect if EU member states do not undertake much-needed reforms, or if they don’t finance projects through Eurobonds.
L’Opinion focuses on the discrepancy between the potential effects of a QE programme and France’s expectations from it. The French government believes QE “will be considerably more efficient than any structural reform policy,” whereas the ECB frowns on the lack of structural reforms in countries such as France, which force the institution to “take all risks without the certainty of managing to save the euro area.” The French newspaper recalls Angela Merkel’s recent statement, underlining that “any ECB action this week mustn’t ease pressure on governments to reform.”
Italian media recall fears expressed by Germany, and especially Bundesbank President Jens Weidmann, that Frankfurt should wait a bit longer and see whether the measures that the central bank has already launched will eventually help the euro area to boost its economy. In an article in Sole 24 Ore, Isabella Bufacchi stresses that a QE programme is a “pure and simple” injection of liquidity, rather than a measure that improves states’ solvency. Cypriot media report criticism from former Central Bank of Cyprus Governor Athanasios Orphanides who said that the ECB has succumb to German pressure in minimising it’s QE programme.
In Handelsblatt, Friedrich L. Sell doubts that QE will improve the euro area’s economy as it did in the US. Instead, he says the ECB should purchase a balanced basked of high-grade private and state bonds of different foreign origin from outside the euro area. In Süddeutsche Zeitung, Claus Hulverscheidt stresses that, despite their divided opinion over such a programme, Angela Merkel and Mario Drahgi “need each other urgently” as they are the “last anchors” of the common currency. “QE is not the long-term cure required for the ailing euro”, reads The Daily Telegraph. Economist Andrew Sentance predicts that QE is unlikely to succeed due to a combination of modest intent, low interest rates and over-reliance on forcing down the value of the single currency, reports The Times. He calls for “more fundamental reforms”.
The INYT’s Jack Ewing underlines that “the most important effect of QE might be psychological. By demonstrating that it is serious about fighting deflation, the central bank could prevent Europeans from lapsing into a mind-set where they think prices are falling and, as a result, slow down their purchases-sapping economic demand. This is why […] Mario Draghi, and other top central bankers talk a lot about ‘inflation expectations’.”
In an interview with Público, economist Richard Koo warns that Europe is going through a process similar to Japan and believes that ECB’s QE will have little impact on the real economy, because it will not influence private sector credit. Mr Koo argues that governments have to change their fiscal policy and adds that the Maastricht criteria are inadequate to deal with a collapsed economy in which private sector savings are huge.
The Belgium press also carries negative comments. A La Libre Belgique article quotes Paul De Grauwe denouncing the ECB’s wait-and-see attitude. Kathimerini reports that German Finance Minister Wolfgang Schaüble has said that Berlin will have to accept ECB’s actions and respect its independence. The Greek newspaper adds that Frankfurt is considering leaving Greece out of the unconventional measure as long as there is no programme agreed with the country’s creditors.
In a more optimistic tone, Het Financieele Dagblad notes that when it comes to QE, Japan and the US have shown that the effectiveness of such a measure depends on decisiveness.The more unexpected the QE, the bigger the influence on exchange rates and market sentiment. Meanwhile, Financial Times columnist Martin Wolf compares the Swiss National Bank and ECB policies designed to combat deflation, arguing that the greatest problems with QE in the euro area are political. © European Union, 2015
