ECB chief Mario Draghi announced the historic acquisition program after the board of the Central Bank in Frankfurt on Thursday.
This means that the central bank can use Until 1140 billion euros (10.000 billion. kr) in the first place.
To print money can not deprive European politicians responsible for implementing reforms, said German Chancellor Angela Merkel several times during the economic summit in Davos.
Denmark pressured clean cut
Shortly after the decision in Frankfurt notified the Danish central bank that it cuts interest rates for the second time in one week to defend the krone against the euro.
Denmark is not in the eurozone in the EU, but Danish kroner are related to developments in the euro exchange rate.
Denmark now have negative interest rates on bank deposits in the central bank.
The interest rate was lowered from -0 2 percent to -0.35 percent.
The lending rate – the policy rate – unchanged 0.05 percent.
The interest rate cut was expected, the news agency Reuters.
Dissension in the central bank
ECB chief Mario Draghi revealed that the decision to implement the comprehensive acquisition of sovereign debt is, was not unanimous.
– A large majority agreed to trigger program now. It was also a good discussion about the timing of adopting this tool is now, said Draghi at the press conference after the board meeting.
It has long been known that Germany has been against such a comprehensive acquisition program.
Compromise on possible losses
The ECB and the national central banks should share any losses on the national debt being bought up.
This is interpreted as a compromise between Germany and other northern European euro countries that mean every euro countries must cover losses on their own country’s government debt, and the southern European crisis countries and France who believes the euro countries jointly through the ECB must bear losses.
Draghi added that there was unanimity on the board that such acquisitions government debt is part of the toolbox that the ECB has at its disposal.
Broad market rises in Europe
To initiate the printing press to buy up debt securities in the capital markets as quantitative easing monetary policy. It involves pumping more money into the economy to boost growth.
European bourses rose 0.5-1 percent after Draghi announced acquisition program.The interest rate on government bonds (government debt) issued by euro fell after the decision in ECB.
The euro weakened 0.6 per cent immediately measured against the dollar.
Norwegian kroner was 5 cents stronger against the euro. Price for 1 euro was at 15.30 o’clock 8.76 million in the international currency markets.
Should get up inflation
The acquisition of government debt will continue from March to September 2016, or as long as it is necessary that the ECB is confident that inflation is moving towards the target of an annual inflation rate of just under 2 percent.
Euro countries had in December a negative inflation of 0.2 percent. The acquisition of debt securities is an attempt to prevent the eurozone ports in a new crisis with prolonged declines.
Quantitative easing in monetary policy – what is popularly referred to as pressing more money and increase the money supply – has long been controversial euro area countries.
Merkel warns against slackening reins
The German Federal Chancellor stood on the podium at the World Economic Forum in Davos Thursday when Draghi held his press conference in Frankfurt.
In the packed auditorium clapped many already when Merkel entered the podium.– There are no black / white solutions, said Merkel.
The German Government boss tried thus to downplay the controversy between Germany and central bank Bundesbank and other euro countries and the ECB in Frankfurt on the need to print money in massive quantities to avoid falling prices and a lingering kinks in economic growth .
Meanwhile, she came with clear warnings to other European leaders, who French President Francois Hollande, that reform efforts can not be abandoned.
Top bosses like Merkel message
– Whatever the ECB does, it can not shade for faktium that the real growth impulses must come from framework that the elected politicians stipulates, Merkel said.
Among the business leaders in Davos meetings Merkel cautious savings and reform line great sympathy.
While she talked, shared many of the listeners still his attention between the message of Europe’s most powerful woman and phones that contained new il messages about the ECB’s concrete support purchases.
Private investment must to
Merkel reiterated several times that government measures to speed up Europe again, no use if private investment is absent.
– It is not surprising to me that there is a continuous debate within the central bank. The world has plenty of liquidity, said Merkel.
She called for an offensive to sharpen the European competitiveness in the future of digital solutions and believed that Europe is about to get behind compared with growth centers in Asia.
“Greece part of euro community “
She came with praise to Italy and Prime Minister Matteo Renzi because the third largest economy in the EU actually has implemented long-awaited reforms.
Also France is underway, she said – without going into detail on the conditions of the French nabolanddet.
– Euro crisis has come under some control, but it is not over, said the German Chancellor.
Merkel reiterated that her line has always been that Greece should remain a part of the euro community.
– There are two factors that are necessary to achieve this : A degree of solidarity, as we have shown, and a willingness to take responsibility for themselves. I’m sure that Greece will still take this responsibility, Merkel said.
Record low interest rates kept unchanged
As expected the ECB decided Thursday to keep its key rate unchanged at a record low 0.05 percent.
The ECB lowered interest rates twice last year, to 0.05 percent in September last year, in an attempt to speed up the ailing economy in the eurozone.
Yet sank growth 0 2 percent in the third quarter.
Also inflation drops. In December had euro countries gathered a negative inflation of 0.2 per cent – what economists call deflation.
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