European Central Bank president Mario Draghi grabbed the spotlight on Thursday, as he announced Europe’s latest hope to revive its weak economy: the so-called quantitative easing, or a bond-buying scheme of 60 billion euros a month.
Aiming at fighting off deflation and stimulating economic growth, the ECB will potentially invest more than 1 trillion euros into the eurozone’s economy by September 2016.
“In March 2015, the Eurosystem will start to purchase euro-denominated investment-grade securities issued by euro area governments and agencies and European institutions in the secondary market,” Draghi said.
But in a nod to German Chancellor Angela Merkel’s threat last week, Draghi warned that the new policy is no silver bullet and will only create the basis for growth.
“It’s up to the governments to implement structural reforms. The more they do, the more our monetary policy will work,” Draghi added.
The massive bond-buying scheme comes after months of strong opposition from Germany, which is worried that Draghi’s plan will stop member states from implementing economic reforms. German Conservative MEP Markus Ferber went as far as calling it “unconstitutional”.
“The ECB’s mandate is to guarantee price stability,” Ferber said. “New debts become cheaper and this is the wrong signal to do any reforms, because they will have cheaper access to financial resources,” Ferber told EURACTIV.
The ECB made the announcement only days before Greece holds elections on Sunday, a move that has been dimmed ‘political’ and has been widely criticised for getting the timing wrong.
“I do not think it is the responsibility of the ECB to be taking political decisions, and that is what will happen,” Ferber added.
Greece goes to the polls on Sunday in what could be a game-changing election, as anti-bailout party Syriza is on track to be the biggest group in parliament.