The European Central Bank took the ultimate policy leap on Thursday, launching a government bond-buying programme which will pump hundreds of billions of new money into a sagging Euro zone economy. Here's what the plans are:
- The European Central Bank will buy government bonds from this March until the end of September 2016
- Together with existing schemes to buy private debt and funnel hundreds of billions of euros in cheap loans to banks, the new quantitative easing programme will pump euro 60 billion ($68.8 billion) a month into the economy
- By September next year, more than euro 1 trillion ($1.14 trillion) would be created
- Bonds will be bought in the secondary market in proportion to the ECB's capital key, meaning the largest economies from Germany down will see more of their debt purchased by the ECB than smaller peers
- ECB President Mario Draghi said 20 per cent of the asset purchases would be subject to risk-sharing, suggesting the bulk of any potential losses will fall on national central banks. Critics say that calls the euro zone concept of risk sharing into question and countries with already high debts could find themselves with further liabilities
- The ECB has already cut interest rates to record lows. Earlier, it left its main refinancing rate, which determines the cost of Euro zone credit, at 0.05 per cent
