European Central Bank president Mario Draghi

The European Central Bank will this week unveil details of its plans to inject cash into the moribund eurozone economy, even as analysts express doubt about the effectiveness of the measures.
Following its surprise rate cut last month, the ECB is not expected to announce any new policy moves at its regular monthly meeting on Thursday, held this time in the Italian city of Naples instead of its usual home venue in Frankfurt.
But financial markets are hoping that ECB president Mario Draghi will provide more details about the bank's contested liquidity programmes, notably its plans to buy asset-backed securities as a way of kick-starting lending in the 18 countries that share the euro.
And some ECB watchers will be listening out for any hints that the bank may embark on a much wider programme of so-called quantitative easing (QE) or the purchase of unlimited amounts of bonds, a policy already practised by other central banks such as the US Federal Reserve and the Bank of England.
At its meeting last month, the ECB surprised the markets by cutting its key interest rates to new all-time lows and unveiling an ABS programme and a covered bond programme to ward off deflation in the single currency area.
And Draghi also appeared to hint at quantitative easing by saying the ECB would use "additional unconventional instruments within its mandate".
Asset-backed securities (ABS) are bundles of individual loans such as mortgages, auto credit and credit-card debt that are sold on to investors, allowing banks to share the risk of default and freeing up funds to offer more credit.
- Reservations about ABS -
The ECB believes that the market for such securities -- an important source of financing for banks to keep lending to small and medium-sized enterprises -- has effectively dried up since the financial crisis.
And the ECB hopes that by buying them on a large scale, it can help revive the market and free up some of the credit channels which have seized up during the long years of crisis.
The problem is that it was precisely complex financial derivatives such as ABS which are seen as the the root of the sub-prime crisis in the US in 2008, leading many observers, particularly in Germany, to harbour deep reservations about them.
Analysts are also unconvinced that the ABS programme would be big enough to solve the problem of stymied credit.
"ABS backed by loans to small and medium-sized enterprises are desirable, but unfortunately not available on any meaningful scale," said Willem Buiter of Citigroup.
- Disappointing uptake of loans -
Another of its liquidity measures, the so-called Targeted Long-Term Refinancing Operation (TLTRO) under which the ECB made ultra-cheap loans available to banks in the hope that they would lend it on to businesses, disappointed market expectations.
The ECB said it lent 82.6 billion euros ($105 billion) to 255 banks as it began the programme, below analysts' forecasts for an uptake of at least 100 billion euros.
Draghi insisted that the uptake was within the ECB's forecast range.
But Commerzbank economist Michael Schubert believed that "the volume of the TLTROs and the ABS/Covered Bond programme will not meet the ECB's expectations."
And that meant the ECB "will have to take action again: in the longer term –- presumably from the first half of 2015 –- the ECB is likely to buy government bonds on a broad front," Schubert said.
Jennifer McKeown at Capital Economics agreed.
"All of this suggests that the ECB will soon take the plunge into full-blown quantitative easing," she said.
"But while QE now seems close to a done deal, we doubt that it will be announced in October. We still think that the bank's December meeting is the most likely timing," the expert said.
Deutsche Bank economist Mark Will said it was "more likely than not that the ECB will announce 'broad-based asset purchases', including public QE -- or purchases of government bonds -- within the next six months."