EU: eyes at Mario Draghi


On Thursday the European Central bank is supposed to extend its monenary stimulus, however, accroding to many independent observers, it has exaused its capacity to continue to purchaise bonds in attempt to stimulate the eurozone slaggish economic growth.

The remedy is far from being ideal as many experts say the EBC is facing a potential backlash from sourcing bonds and it needs slow down its pace in ‘quantitive-easing’ (QE) programme.

The ‘quantitive-easing’ programme  has clear political impact on  futute of Italy, and subsequently on eurozone, also on range of elections in major EU countries next year, where growng discontent of citieznes might relfect in voting for nationalistic parties, calling themselves ‘new patriots’, and promisitng referendums of EU membership.

There are also voices claiming the EBC should do more for recovery. At the moment the most volnurable are the Italians who are waiting for the ‘Chirsmas present’ from the EU.

 Interest payments on the Italy debt, which is around a 30% larger than its economy, are likely to surge if the ECB stops buying it, potentially jeopardizing Italy’s position in the eurozone. Prime Minister Matteo Renzi, who stepped down on Monday after voters rejected a proposed a reform in favor of government, opened a prospect for Eurosceptics for moving on with their agenda up to withdrawing Italy from eurozone and re-introducing ‘old, good’ lira.

ECB President Mario Draghi has denied repeatedly that policy makers have even discussed quantitive easing (QE), increasing the money supply to the system, and underlined on different occassions the the bank stimulus must be preserved.

Most economists expect the ECB to announce a six-month extension of QE on Thursday, probably at the current pace of EUR80 billion a month. The program had been due to expire in March.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s