As a one trillion euro quantitative easing program starts to roll, skeptics are wondering if it will work and force banks to lend.

 

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Shiny new notes from ECB presses. A sight to cheer the most jaded euro sceptic. One we may see a lot of as a one trillion euro QE programme starts to roll. But will it work - and force banks to lend? Europe specialist, Mike Gallagher of IDEAglobal. SOUNDBITE (English) Mike Gallagher, Director of Research, IDEAglobal, saying: ''Banks will participate. They've built up a very large portfolio at much higher yield levels, and the ECB they can use to take profits. I think it will lead to some real sector lending. To be honest, if you at look at the credit data for households and non-financial corporates, we're past the worst. So it will improve - the question is how quickly.'' His is the majority view - but only just. Little more than half of economists polled by Reuters believe QE can bring inflation back to target. Thursday's ECB meeting also produced new forecasts from Mario Draghi. A more upbeat growth outlook cheered markets. Other projections are viewed more cautiously. SOUNDBITE (English) Mike Gallagher, Director of Research, IDEAglobal, saying: ''Where there is the debate is over the inflation forecast. The forecast of 1.5 for next year and 1.8 for 2017 is pretty aggressive.'' The ECB meeting shifted focus back to its venue on this occasion: Cyprus. Ironically, it's excluded from the ECB bond buying programme. But its finance minister told Reuters that - after a banking crisis and 10 billion euro bailout in 2013 - it wants to seek its own funding again. Bonds could be issued this year. Greece though and its funding problem may still be the fly in the ECB ointment. Draghi making clear that EU Treaties don't allow the ECB to raise a ceiling on the short-term debt Athens can issue in exchange for cash. SOUNDBITE (English) MARIO DRAGHI, PRESIDENT, ECB, SAYING: "The ECB is a rule-based institution. It is not a political institution." Greece confirms that it's made the first 310 million euro repayment on a 1.5 billion IMF loan due this month. A small but vital gesture with Athens set to present its latest reform plans to the EU, as it presses a case for a bailout extension.

 

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"ECB Quantitative Easing Beckons, but Will It Work?"