The $19 billlion writedown at UBS has cheered some investors who think that the worst of the credit crunch is now over. But the European Central Bank still faces the prospect of falling growth and rising prices.

ECB officials have said they intend to keep battling inflation that is currently above the central bank's comfort zone. And unlike the Federal Reserve and the Bank of England, the ECB has yet to cut rates as a means of stimulating the economy as lenders tighten purse-strings.