Economic recovery in North America since the 2008 recession has been painfully slow, but nowhere near the non-recovery in Europe. Recent numbers from the 18 nation Eurozone show a meagre .2% annualized growth rate and an unemployment level of 12%. This combined with widespread opposition to austerity - particularly cut backs in government spending on entitlement programs - have created an economic doldrums requiring "out of the box" action.
And that's just what the European Central Bank did. Yesterday, it lowered interest rates to unprecedented levels. In fact, the rate for money deposited overnight by commercial banks at the ECB has gone negative - meaning the central bank now charges them .1% to hold their funds. This is ground breaking news! Never has a central bank charged for this service; they've always given a nominal amount of interest or no interest. The move is designed to encourage banks to stop hoarding and lend out that money to stimulate the economy.
Mario Draghi, President of the ECB, said "If required, we will act swiftly with further monetary policy easing", however, he never suggested that they would consider quantitative easing (an American program of printing excessive amounts of money "to grease the wheels"). One clear impact will be a reduction of the euro's value vis a vis other currencies which will make EU exports cheaper and more competitive.
These measures may do the job temporarily but long-term, only debt reduction, more competitive wages/salaries and less bureaucratic red-tape will kickstart the boost that the EU desperately needs.
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