The European Central Bank launched quantitative easing to st
FRANKFURT — The European Central Bank said on Thursday that it would begin buying hundreds of billions of euros worth of government bonds in an ambitious — though some say belated — attempt to prevent the eurozone from becoming trapped in long-term economic stagnation.
The long-awaited program, known as quantitative easing, comes after inflation in the 19 countries of the eurozone fell below zero and raised the specter of deflation, a sustained decline in prices that can lead to higher unemployment and that is notoriously difficult to reverse.
Programs of quantitative easing by the Federal Reserve in the United States and by the Bank of England in Britain have helped the economies of those two countries recover from the global financial crisis more successfully than the eurozone has been able to.
If successful, quantitative easing would push down market interest rates in the eurozone and make it easier for businesses and consumers to borrow money, helping to stimulate the economy and restore inflation. Quantitative easing could also have a psychological impact, helping to raise expectations that inflation will begin to rise and thus encourage people to spend now rather than wait.
The decision to begin buying government bonds on the open market came after a debate that lasted months. Mario Draghi, the European Central Bank president, sought to overcome resistance from German members of the governing council and the broader German public, which regards quantitative easing as a form of wealth transfer to countries like Italy.
Although the Federal Reserve and the Bank of England used quantitative easing to rejuvenate their economies, such a program would be more complicated in the eurozone. There is no widely traded, Pan-European government bond similar to United States Treasury securities, which were the main vehicle for the Fed’s program.
Another question is whether quantitative easing can help fix the eurozone economy, especially since it has taken so long for the central bank to begin a large-scale bond-buying program. Many economists and businesspeople are skeptical.
“I do not believe it will have a major effect whatever will be announced,” said Karl-Ludwig Kley, chairman of Merck, a German pharmaceutical and chemicals company that is separate from Merck & Company in the United States.
“I do not believe bond buying or whatever is the remedy,” Mr. Kley said in an interview at the annual meeting of the World Economic Forum in Davos, Switzerland. “I do not see, because of these programs, consumers buying more. I do not see companies investing more.”