Can The European Central Bank Buy Government Bonds QE Can Revive The Euro Zone?

In the middle of December, a survey of 32 euro zone economists working in the financial sector found that most people expect the ECB to launch quantitative easing in 2015 to catch up with the rest of the world's other major central banks, which have bought large amounts of sovereign debt after the outbreak of the financial crisis.

26 economists believe that the European Central Bank will start buying government bonds this year, while 5 economists do not think so, and 1 do not answer.

The staggering recovery and the worrying decline in inflation have raised concerns about another crisis in the European Monetary Union, and put pressure on policymakers to put aside Germany's resolute opposition and start buying sovereign debt.

Mario Draghi, the European central bank governor, gave its strongest signal last week, saying the central bank will expand the scope of asset purchases in the next few months to include sovereign debt.

The relevant decisions are likely to be made at the next management committee meeting in January 22nd.

Most economists surveyed, however, expect growth and inflation in the euro area to remain weak even with quantitative easing.

Dario Perkins Dario, an economist at Lombard Street Research, said that quantitative easing would help to raise inflation expectations and devalue the euro, but it would not be a "thorough game".

Yorke Kramer (J? RG Kr? MER) of Commerzbank, Germany, said that QE would lower the yield of government bonds and "help the Treasury and its banks in highly indebted countries such as Italy".

However, he added that quantitative easing will not change low growth.

Level "will only push up asset prices".

Although several respondents said they wanted to buy

It may help counter the threat of deflation and reduce the yield of weaker countries' sovereign debt, but most economists agree that unless governments support the efforts of the European Central Bank, growth will remain weak.

Carsten Breski Brzeski of Holland international direct bank (ING-DiBa) said: "quantitative easing is not a panacea for the euro zone". (Carsten)

He believes that any

"It is only when the government is allowed to open the investment plan of deficit financing" to maximize its effectiveness.

"It is doubtful whether this will happen in the eurozone."

Some economists say the larger scale of quantitative easing is more likely to succeed.

"If the scale is large enough, it will have some impact on the economy, even if it is only to lower the euro," said Jonathan Lounis Jonathan Loynes, a research group at Capital Economics.

Most economists predict the size of the purchase is 500 billion euros, but some people think up to 1 trillion euros.

Some economists also expect the ECB to buy corporate debt while buying sovereign bonds.

The European Central Bank said in December that Delaki and most members of the management committee supported the expansion of the balance sheet from 2 trillion euros to 3 trillion euros.