Tradeline Financials - European Economic News, Week 3 - 2015

Jan. 15, 2015 - PRLog -- Tradeline Financials is an independent, diversified financial services firm catering to all types of investors. Our goal is to understand, anticipate and meet our clients' changing financial needs with the vast array of high-quality products and services at our disposal.

Tradeline Financials - European Economic News, Week 3 - 2015

Yesterday was a breakthrough day for Mario Draghi at the ECB.

A scheme which has been under scrutiny since 2012 has been confirmed, in principle as legal under European Law.

The head of the European Central Bank's Outright Monetary Transactions or OMT program was conditionally approved by the European Court of Justice yesterday, so long as some conditions are clarified and met.

Both Draghi and the ECB have been under pressure to stem deflation and look to some form of QE type stimulus within the EU and this could pave the way for more cash to be injected into the system very soon.

While OMT tackled excessive borrowing and costs for governments should they leave the Euro, QE would specifically tackle deflation and falling prices. Both very different scenarios. Both policies also target different kinds of bonds. OMT would only be applied to government bonds that were too expensive, whereas QE would look to secure bonds of any country.

In purchasing the bonds the ECB will be using newly created money to fund the transactions. The key difference is the OMT funds would be sterilized, a procedure which would not place the costs of the purchase on the economy, with QE this would not be the case.

With this news many predict an announcement as soon as next week on QE in the EU however it will no doubt still face staunch opposition from some corners of Europe, specifically form within Germany who have certain members of parliament standing firmly against this move.

European and US markets should benefit from the news and with both expected to open higher during Thursday.

Major Global Indices as of 15th January 2015:

Dow Jones - 17,427.09 (-1.06%)

FTSE 100 - 6,388.46 (-2.35%)

Nikkei - 17,108.70 (+1.86%)

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