The European Central Bank is weighing a proposal to inject as much as €1.1 trillion ($1.25 trillion) into the euro zone’s economy to stave off deflation, a dangerous downward spiral in prices. Under such a “quantitative easing” program, the ECB would buy the bonds of governments that use the euro.
The first thing you need to know is that the euro zone economy is very, very weak. According to the statistics agency Eurostat, the unemployment rate is 11.5 percent. Growth in the euro zone is less than 1 percent. And recently the area has been experiencing deflation, which prompts people to delay making purchases and investments and drives down economic activity.