CCTV Script 22/01/15

— This is the script of CNBC's news report for China's CCTV on January 22, Thursday.

While people are saying QE is finally coming to Europe, theymight not know that it had already been there, a long time ago.

Economists Carmen M. Reinhart and Kenneth S. Rogoff point out in their paper that although some seem to believe that inflation only really became a problem

with the advent of paper currency in the 1800s, students of the history of metal currency will know that governments found ways to engineer inflation long before that.

The main device was through debasing the content of the coinage, either by mixing in cheaper metals, or by shaving down coins and reissuing smaller coins in the same denomination.

Modern currency presses are just a more technologically advanced and more efficient approach to achieving the same end.

The following chart shows the pattern of sustained debasement emerges strikingly, which plots the silver content of an equally weighted average of the European currencies between 1400 to 1850. And during Napoleonic Wars from 1799 to 1815, Austria debased its currency by 55%.

"The March Toward Fiat Money" shows that modern inflation is not as different as some might believe.


MICHAEL KEMMER / CEO, Federal Association of German Banks

We think that monetary policy is not helpful to solve structural economic problems. If you look to Japan, you see that they tried to do it for more than 20 years and it has not been successful. We don't think QE is necessary and we don't think that with quantitative easing, the economic problems in Europe can be solved.


GILES KEATING / Global Head of Research, Private Banking & Wealth Mgmt, Credit Suisse

The QE will be helpful in the background , but its heavilydiscounted already so I wouldn't say Europe is at the start of acapital gain on the scale of tripling like you've seen from thelows in the U.S. back in the dark days of 2008 to 2009.



I think Mario Draghis done a great job. And I hope it works, I think they should probably do something. It shouldn't mask the fact that they need structural reform. They really need structural reform in Europe.

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