That’s the thinking headed into tomorrows 3 year long-term refinancing operation by the ECB. The more money that is pumped into the system, the more likely bank credit is to thaw and the better sovereign fortunes will appear, is the thinking.
Estimates range from EUR 350 bln to EUR 500 bln of loans being made to banks.
Keep in mind, this is a classic case of quantitative ease by a central bank. Most on these pages have argued that QE is bad for a currency, though the results of previous QE operations are a mixed bag at best, regarding the long-term strength of a currency.
