The leaders of Italy and France will rejoice at the ECB's decision to buy the debt issued by their governments. But members of the European Parliament are skeptical the policy will lead Europe out of the crisis.
The President of the European Commission, Jean-Claude Juncker, put on a cloak of silence following the big announcement: "I never comment on the European Central Bank's decision, at least not in public. The ECB is independent and monetary policy belongs to its domain, not ours," he said Thursday.
The ECB's decision to buy 60 billion euros ($68.76 billion) worth of private and sovereign assets a month, for a total of 1.140 trillion euros, until September 2016, far exceeded analysts' predictions. The move is sure to please countries like France and Italy, whose leaders are holding out hope that a significant monetary injection could help revive their economies.
French president Hollande and Italy's Matteo Renzi hope the ECB cash will ease their budget deficits
Prior to Thursday's hotly anticipated announcement, Italian Prime Minister Matteo Renzi spoke of an "important decision for my country, which will chart the course ahead for the eurozone as a whole." In what may have been a slip of the tongue, French President Francois Hollande praised the stimulus a full three days in advance, saying it would "provide significant liquidity to the European economy and create a movement that is favorable to growth."
There are early signs that the ECB's landmark move could be paying off, with European government borrowing rates plummeting to record lows as the news whet markets' appetite for shares.
But ECB Chief Mario Draghi stopped short of rolling out a full-fledged quantitative easing buffet in Frankfurt, saying that countries already under a bailout program - such as Greece - would have to fulfill additional criteria to qualify for a serving of freshly minted euros. Draghi also said the ECB would only buy debts on the so-called secondary market that have received an investment-grade rating. He added that no country would receive special treatment.
Left and right in parliament are not pleased
The mood was less upbeat in Brussels, where many economists and members of the European Parliament lashed out at the large-scale purchasing program. The European United Left faulted the ECB for throwing money after the financial system instead of the real economy.
"Throwing a party for stock investors and the richest five percent does not create a recovery," blasted Fabio De Masi, economic spokesman of the Left in the European Parliament. He also criticized the ECB's decision to hold off on buying Greek government bonds, calling it "an arbitrary act of trying to blackmail a potential Syriza government in Athens." Greece's far-left Syriza party, which is also a member of the United Left parliamentary group, is widely expected to win the Greek national election on Sunday
Markus Ferber, a German member of the conservative European People's Party, flatly rejected the ECB policy: "ECB purchases of sovereign debt violate the mandate of the European Central Bank," he said, and added that it may have "short-term effects," but would hit the eurozone negatively in the long run. In an interview for DW, Ferber also lambasted the reasons given by the central bank for its decision, namely fighting deflation by expanding the money supply in the eurozone.
"The ECB is fighting something that doesn't exist. If you exclude the effects of falling oil and gas prices, there's no deflation in the eurozone, whatsoever. Therefore, the bank is wasting its last remaining ammunitions, thus robbing itself of the ability to act in future," the conservative politician told DW.
Once the QE genie was out of the bottle, the ECB has been unable to contain it, says DIHK's Volker Treier
Bad signal to reform-minded governments
For the deputy head of the German Chambers of Industry and Commerce (DIHK), Volker Treier, the reasoning behind the ECB's decision is, however, "plausible" at least to some extent.
"It's plain to see that prices are increasing too slowly," he told DW. "Markets fear deflation, which means Mr. Draghi was right in rethinking ECB policy. And once the policy was out in the public debate, he couldn't possibly contain it anymore."
Treier's main criticism, however, is about the ECB breaking the rules of free enterprise - known in Germany as 'Ordnungspolitik' - which he thinks goes along with the central bank printing of fresh money.
"It's not at all an appropriate means to increase competitiveness in the eurozone, which is important. The move sends a bad signal to countries, which may now be led to think that their state budgets are going to be funded by the central bank under any circumstance."
As a matter of fact, ECB President Mario Draghi was eager to avoid the impression that he wanted to let struggling countries such as France an Italy off the hook with regard to reforming their economies. He noted that he would then be "misunderstood."
Guntram Wolff, analysts with the Brussels-based think tank, Bruegel, also thinks that buying government bonds and other assets on the secondary market is counterproductive, given the economic situations in various eurozone countries.
"Under the best-case scenario, the program isn't going to show much effect, in the worst case, it's going to worsen the situation," he told DW.
Small savers being punished
An MEP for Germany's right-wing populist Alternative for Germany (AfD) party, Beatrix von Storch, is scathing in her criticism of the ECB. The central bank was using "illegal and anti-social methods" in violation of its mandate, she said. "Asset prices will be inflated, while at the same time private consumption will become more expensive. We are seeing a redistribution of wealth from consumers to banks and rich people."
She also pointed out that the ECB's "perverted" low-interest-rate policy would render saving money unattractive, because "those who save, will lose."
Liberal members of the European Parliament said they weren't happy with the decision, but showed some understanding for it. Belgium's Guy Verhofstadt, parliamentary leader of the Alliance of Liberals and Democrats in Europe (ALDE), warned: "The ECB intervention mustn't lead to complacency, because quantitative easing isn't a panacea." Europe would need more investments, he added, and less "cheap money."