"In our view, all the ECB’s latest policy announcements are targeted at the supply side of the Eurozone’s credit cycle: banks. In a couple of months, once all the current measures have been fully implemented, banks can no longer be the root cause of sluggish credit growth."
"However, if neither economic nor credit growth picks up in the next 3-6 months, and if the ECB remains in its current whatever-it-takes mode for the economy, fully-fledged QE now looks like a realistic final option."
"What if the latest monetary policy fireworks turn out to be ineffective? Fed-style QE, ie, the purchase of government bonds, is in our view still an illusion of omnipotence."
"A further lowering of government bond yields from already low levels would not make a big difference. Therefore, a more effective option for the ECB would be, at least in theory, to start a Bernanke-style helicopter drop of money, if it really wants to at least support the demand side of the Eurozone economy."
"It could literally print money, or adopt indirect measures such as, for example, purchasing EU bonds issued to finance new European investment projects."
"While we would see this as a highly controversial, final and nuclear option, we don’t think the ECB is ready to make history as a modern-day Sisyphus."
"Therefore, new actions, ideally both by governments and the ECB, to push the Eurozone economy over the stagnation hill look highly probable."