The euro slid into a low it hadn’t witnessed since March 2006, to stand at $1.1864, about1.2% against the dollar, and merely recovered to climb to $1.19370. The turmoil in Greece included factors that occasioned the drop. The situation may necessitate the European Central Bank (ECB) to induce a stimuli to the economy.
ECB President Mario Draghi said the bank could soon start quantitative easing, QE.
Although the ECB has already cut interest rates to a record low level, and also bought some bonds issued by private companies, a full-scale programme of quantitative easing QE has not yet been launched.
But on Friday, Draghi hinted in a newspaper interview that the bank might soon start a policy of QE by buying government bonds, thus copying its counterparts in the UK and US.
The purpose would be to inject cash into the banking system, stimulate the economy and push prices higher.
Draghi said told the German newspaper Handelsblatt that “We are making technical preparations to alter the size, pace and composition of our measures in early 2015.”