“Whatever It Takes” Section A Group C: Meghan Hom, Tom James, Greg Jasinski, Byung Jeon, Parsh Jain

Eurozone Crisis Began in 2009, in the aftermath of the U.S. Financial Crisis European nations such as Greece bordered sovereign default Bond yields skyrocketed as panic filled the markets Bailouts and Turmoil lead to the decline of the Euro

Mario Draghi President of ECB 2011-Present MIT Graduate with working experience at Goldman Sachs Spoke at The Global Investment Conference in London on July 26, 2012 regarding the future of the European Economy “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.”

Quantitative Easing When a central bank purchases government securities to increase the money supply and encourage lending and investment Can also be used to increase inflation Could also cause “stagflation” Where inflation rates increase but the economy stays stagnant

Quantitative Easing Some of the ways quantitative easing is accomplished: Providing liquidity to banks, making it easier for them to give loans to companies Increasing the money supply, depreciating its exchange rate with other countries Lowering the yields on sovereign bonds, making it easier for governments to borrow on financial markets

European Central Bank Instability in the Euro due to the debt crisis “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” – Mario Draghi July 26, 2012 Promise boiled down to printing unlimited money to combat “harmful” investors Fiat currency is backed by confidence in the government If the general public didn’t have confidence in Draghi, the Euro would have continued to sink

Bank of Japan In September 2016, the Bank of Japan introduced Quantitative and Qualitative Easing 2016 statement - “inflation overshooting committing” Draghi like statement Refuted statements because bond investors were increasingly testing the central bank’s resolve Tried to control long and short term interest rates through market operations

Sentiment and Outcome ECB ended up buying back bonds of its distressed countries(Outright Monetary Act), however it was much later in 2015 and Eurozone economy improved before the action occurred The speech was able to bring consumer confidence up and bring bond yields down throughout the Eurozone Stocks hours after speech Greece returns to the market(2017)

Conclusion Traders continue to be bullish on the euro today Growth in the Euro economy is solid and broad-based Meghan "bullish" means that an investor believes that a stock or the overall market will go higher, and "bearish" means that an investor believes a stock will go down, or underperform. Following strong growth rates in 2017, the recovery in the euro area has slowed down in 2018, however. The duration of the current expansion, which began in 2013, is still below the historical average. Its amplitude, the percentage gain in GDP relative to the trough, is also low by historical standards. At the same time, downside risks to growth, notably related to the threat of protectionism and the rise in trade tensions, remain prominent. The outlook for US monetary policy moves and vulnerabilities in emerging markets add to the overall uncertainty, as does the limited progress on the Brexit discussion.

Works Cited https://www.ecb.europa.eu/press/key/date/2018/html/ecb.sp180831.en.html https://www.investopedia.com/terms/q/quantitative-easing.asp