Quantitative Easing Policy expected to Improve European Economy in Short Term

European Central Bank on the 9th Mar. officially introduced the quantitative easing monetary policy. As for the results and prospects of its implementation, most analysts believe that this policy will result in euro decline and will be favor of short-term exports from Europe, but a solid implementation of structural reforms will be needed if the weak economic is improved.

According to the ECB's plan, it will buy 60 billion euros of government and private bonds per month from March to the end of September 2016. Thus, the euro continued to decline.

Continued weakness in the European economy is the direct cause of the ECB's introduction of quantitative easing. Currently economy growth is less than 1% in the euro area economy, in the major economies France and Italy, the economy growth is close to zero, economic growth in many countries has fallen into deflation. Thus, to stimulate growth and consumption by quantitative easing monetary policy is the ECB's policy objectives.

In evaluating the ECB easing monetary policy, director of the International Centre for European Economic Research politics Frederick Eriksson said the policy is necessary, and it’s an opportunity to amend the "conservative" monetary policy in the past few years. He said, "The purchase of debt is in favor of implementation of the plan to resolve the situation in Europe and low inflation in the short term, to prevent the spread of the risk of deflation, but also to stimulate economic growth."

However, some experts are not optimistic on the European QE outlook. President of China Foreign Exchange Investment Research Institute Tan Yaling said, quantitative easing monetary policy will intensify contradictions among the countries, the economic disparities among countries will be widened. She added, "Developed Countries like Germany will be getting better and better, countries like Greece and Cyprus will become increasingly poor, thus intensifying the eurozone splitting. If the mechanism, institutional and market issues aren’t solved, there’s no use to print money. "

To achieve full recovery of the European economy QE alone is not enough. Eriksson pointed out that the full implementation of structural reforms to improve the competitiveness of the region, is the key to long-term economic growth in Europe. (www.chinainout.com)