In an attempt to revive a failing economy the European Central Bank (ECB) has begun purchasing French denominated assets. The ECB has named the stimulus measure the Covered Bond Purchase Programme (CBPP).

To purchase the bonds the ECB will expand its balance sheet and inject newly created currency units into the economy in a process similar to quantitative easing. The ECB hope the measure will boost demand and stimulate the economy.

The CBPP was announced last week by ECB President, Mario Draghi, after inflation data indicated the 18 member Eurozone is heading into a deflationary spiral. Inflation in the Eurozone fell to 0.3% in September which is below the bank’s target of 2%.

President of the German Bundesbank, Jens Weidmann, said this latest measures suggests the ECB is moving slowly towards outright QE, which would involve the ECB purchasing sovereign debt. Most Germans oppose outright QE as they fear ultra-loose monetary policy will lead to levels of inflation.

Historically precious metals outperform traditional asset classes when Central Banks adopt loose monetary policies.