European stock markets were boosted by the European Central Bank’s bond-buying scheme with several share indexes hitting seven-year highs on Thursday.
Banks and car makers were among the best-performer companies as they are likely to benefit from cheap lending rates and a weaker euro.
But the head of the World Bank, Jim Yong Kim, told euronews that on top of the bond purchases, eurozone governments also need to do more to reform their economies.
Referring to the bond buying he said: “This is a tool and it should be used, because the potential to have a self-fulfilling and continuous deflationary cycle was very real. The other half of this is that there’s still not enough to really solve the problems. You know, the countries that are in the most trouble, have to move forward with their reform agenda. What an opportunity! We have historically low oil prices and now we have a quantitative easing. This is now the time to really jump in.”
Germany was the least enthusiastic with economists, politicians and business leaders there warning this is taking the euro system deeper into unchartered territory.
Hans-Werner Sinn, the head of the influential Ifo economic think-tank, called it “illegal, unsolid state financing by printing money”.
At the Davos Economic Forum they less sceptical. Euronews correspondent Sarah Chappell canvassed opinion and concluded: “Despite some cautious voices, there is a general sense of enthusiasm at the forum over the European Central Bank’s landmark move. Several delegates I’ve spoken to have pointed to the open-endedness of the programme – a sign that ECB quantitative easing could be with us for quite some time.”