-Larry Summers, former U.S. Treasury Secretary
Super Mario did not let market participants down, as he announced full-blown QE programme in an ambitious attempt to save the Eurozone's economy from being trapped in long-term economic stagnation. The European Central Bank agreed to purchase government bonds worth 60 billion euros a month, which is slightly more than was expected by many analysts, who had called for 50 billion euros a month. The long-awaited programme comes after inflation in the Euro bloc broke below zero and put prolonged deflationary threat on the horizon, which can lead to higher unemployment and is notoriously difficult to reverse. The ECB will be buying government bonds, debt securities issued by European institutions and private-sector bonds starting from March 2015 till at least September 2016. Such a decision would pump large amounts of money into the financial system that could then used by banks and other lenders to boost available credit. Consequently, that could spur consumer spending and act as a support to economic growth. The risks associated with the bonds issued by EU institutions will be shared; however, purchases of other government bonds will not be subject to loss sharing, Draghi said.
Ahead of the announcement, the central bank also decided to leave benchmark interest rates, the cost of borrowing at the central bank, unchanged at 0.05%.
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