ECB Stimulus May Lack Desired Scale

The European Central Bank’s plan to buy private sector assets may fall short of its goal and pressure is likely to build for bolder action early next year, with government bond purchases an option, ECB sources said.

The euro zone’s central bank started buying covered bonds last week and plans to buy asset-backed securities (ABS), or bundled loans, later this year—both with a view to fostering lending to businesses and thereby supporting the bloc’s economy.

ECB President Mario Draghi has said he wants the purchase plans, together with the provision of new cheap loans to banks, to increase the ECB’s balance sheet towards its levels of early 2012—up to 1 trillion euros higher than today.

CNBC

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