ECB expected to launch $1 trillion QE program
Duncan Richardson, News Editor
22 Jan 2015, 1:32 p.m.
The European Central Bank (ECB) is set announce a $1 trillion quantitative easing program later today in an attempt to stop the 19 member Eurozone spiralling into a deep recession. The ECB is expected to purchase up to 50 billion euros of government debt every month until the end of 2016.
Quantitative easing will involve the ECB electronically creating new money to purchase government debt in an attempt to stimulate the European economy and lower yields on sovereign debt. By lowering the cost of borrowing the ECB is hoping banks will be encouraged to lend, which in turn will stimulate the economy.
Since the start of the 2008 economic crisis the Bank of England has printed £375bn of cash which is sufficient to purchase every property in Scotland and Northern Ireland. Whilst the Federal Reserve has printed enough money to buy every property in London and New York combined. Unsurprisingly the euro has fallen significantly against both the U.S. dollar and British pound.
The German Central Bank are strongly against QE as they are concerned excessive money printing could lead to high inflation and destruction of the euro. Although it is widely expected the ECB will formally announce a QE program later today a number of questions remain.
How much money will they print, which member countries debt will be purchased and who will be on the hook in the event of a default. Historically gold and silver outperform traditional paper assets when Central Banks print money
Gold is currently trading at £849.63 per ounce, silver at £11.93, platinum £843.56 per ounce and palladium £504.27 per ounce.