ECB Loans Falling Short

Mario Draghi is about to get an idea of how far reality falls short of his intentions.

A round of long-term loans by the European Central Bank to lenders this week won’t even cover the repayments they owe from a previous program, according to a Bloomberg News survey of analysts. The operation could show that stimulus measures the ECB president says are “intended” to add as much as 1 trillion euros ($1.23 trillion) to the financial system won’t suffice without large-scale buying of assets such as government bonds.

Draghi has promised the ECB will act should current stimulus prove insufficient when it is reassessed early next year, and the central bank is said to be preparing a QE package to be discussed at the next monetary policy meeting on Jan. 22. The debate is dividing officials though, meaning each fresh piece of evidence could prove critical in swaying opinion.

Bloomberg

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