Frankfurt – Under a European Central Bank President Mario Draghi’s plan, at least €1.1 trillion will be pumped into Europe’s economy over the next two years after bank’s confirmed plans for a stimulus package.
The ECB president added the plan would continue until the bank saw a sustained adjustment in the path of inflation. The programme is designed to start growth in a faltering eurozone. The bank wants to avoid a deflationary spiral, which would encourage consumers to hold off on spending in the hope that goods and services would keep getting cheaper.
The plan would witness the bank and national central banks hoover up Government and private-sector bonds to get more cash on to banks’ balance sheets, and encourage them to lend. It is controversial. Critics say it will discourage countries from dealing with deficit problems.
Mr McQuaid said, “If you pass the money to the banks, you’re assuming the banks will pass it on,” Merrion Capital economist Alan McQuaid told the Irish Independent. I don’t think it’s going to be as effective as it wants. The banks haven’t shown anything up to now to get things going. In fairness to the banks, you could argue that a lot of what’s gone on is demand-driven rather than supply-driven. I think, generally, the austerity thing has stuck with people – a lot of people are highly in debt and they don’t want to be getting themselves into more trouble.”
