- Hans-Werner Sinn, head of Germany's Ifo economic institute
It is widely expected that the European Central Bank will announce a launch of quantitative easing as early as 21 January, as consumer prices in the currency bloc fell into deflationary territory, preliminary data showed. QE programme is likely to be based on the paid-in capital contributions made by national central banks in the Euro bloc. The level of this contribution would define how much of a country's sovereign debt the ECB would buy. Germany is the largest contributor, paying 17.9% of the total contributions, while France, the Euro zone's second biggest economy, pays 14.2%. Cyprus, meanwhile, pays the least with 0.15% of the total. The central bank has been considering the QE programme's size of around 500 billion, while analysts are sceptical whether that would be enough to revive the Euro zone's economy. The ECB also discussed a hybrid approach to government bond buying, which would include the central bank purchasing debt with risk sharing across the region and separate purchases by national central banks. Such an approach would help to ease German concerns over the ECB accepting debt of struggling nations such as Greece.
Meanwhile, some experts see no need of the ECB's actions so far. One of them is Hans-Werner Sinn, head of Germany's Ifo economic institute, who believes that deflation in not an excuse to start QE programme, as consumer prices fell due to lower crude prices.
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