Eurozone QE explained

Synopsis

The European Central Bank plans to purchase up to 850 billion euros of government debt by September 2016, positioning itself as a major player in the eurozone's government bond markets. As of November last year, the market holds approximately 6.7 trillion euros in bonds. The Bank of England has successfully implemented quantitative easing, buying a significant portion of UK gilts. However, the European Central Bank faces challenges as it must navigate 18 different national bond markets, each with unique characteristics. For instance, the Bank of Italy needs to acquire around eight percent of its government's bonds, while the Bundesbank in Germany must buy as much as 18 percent of the German market. This task is complicated by the unpopularity of quantitative easing in Germany, where the ECB has faced criticism from political and economic leaders, including Bundesbank governor Jens Weidmann. Amidst a fragile global economy, investors are increasingly seeking safe assets like German bunds.