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The European Central Bank announced plans to buy government bonds from national banks. Quantitative Easing, 60 billion euros a month. Although ultimately I am trying to make a decision on what this will likely do to the exchange rate, I am currently at the point where I don't know what the national banks will do with all of the financing.

What does the ECB expect will happen to national bank bond yields with their buying? How abnormal in amounts would their buying be than from investors buying the government bonds?

What does the ECB expect the national banks will do with all of the new "demand" for their bonds? Do more commercial lending to spur the economy? I also didn't get the impression that there is any actual new productivity taking place to really grow any of the individual country's economy no matter how much additional lending takes place. Opening up the potential to a wave of defaults, presupposing that more commercial lending would take place.

If anyone could shed some light on this, that would be great. Ideally not really opinion based, but more so in line with something official or some school of thoughts.

For analogies' sake, I really couldn't see the US Federal Reserve buying Montana bonds to spur commercial lending in Montana and thinking this would help the economy in Montana.

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