ECB begins €1.1 trillion plan to lift Eurozone
The European Central Bank (ECB) has launched its massive €1.1 trillion plan aimed at kick-starting economies across the Eurozone.
The so-called quantitative easing (QE) programme will see the ECB buy up bonds, primarily those issued by banks and other companies in the private sector, in a bid to increase money supply across the region and encourage banks to lend more.
Under the scheme, Eurozone central banks will buy about €60bn of public and private sector bonds every month until September 2016.
While Ireland's economy has been performing well, it stands out in stark contrast to many other European countries that are still struggling to generate growth.
The ECB has slashed interest rates to near zero in an effort to boost flagging economies, but it has failed to have the desired effect.
That prompted the decision to embark on the huge QE programme. In 2008, the United States embarked on the first of three QE programmes in a bid to revive its economy.
The ECB also wants to raise inflation, as deflation, where prices continually drop, deters consumers from making purchases as they expect prices to fall further.
"It will also help businesses across Europe to enjoy better access to credit, boost investment, create jobs and thus support overall economic growth," according to the ECB.
The QE programme also drove the euro to a near 12-year low against the US dollar.
The ECB started buying public sector bonds yesterday, as Ireland's borrowing costs fell to a new historic low.
Ireland's National Treasury Management Agency (NTMA), which handles the country's national debt, is planning to raise €1bn on Thursday.
The NTMA has been active in issuing new bonds in an effort to drive down the interest rate on Ireland's massive debt pile.
The agency predicts that Ireland's national debt will rise from €203bn last year to almost €215m in 2016.
But as a percentage of gross domestic product, the debt will fall from 108pc this year to 95pc in 2018.