After Massive Stimulus That Has Failed to Stimulate, EU Has No Easy Answers

FRANKFURT (Reuters) – European Central Bank policymakers are debating ways to wean the euro zone off years of easy money, floating ideas such as a new kind of multi-year loans and staggered increases in interest rates, sources told Reuters.

The ECB will have a difficult task over the next couple of years: dialing back its unprecedented stimulus without hurting a banking sector still deeply divided along national lines.

Conversations with five sources on or close to the ECB’s policymaking body showed rate-setters were beginning to come up with ideas to ease the transition, including raising only the interest rate on bank deposits at first and offering multi-year loans at floating rates on a permanent basis.

These ideas are designed to avert a liquidity squeeze feared by bankers and investors in southern Europe.

A spokesman for the ECB declined to comment