20101016_ldp001With the European Central Bank (ECB) recently announcing new stimulus policies, some economists have highlighted that other central banks could be ready to counteract any foreign exchange fluctuations, thus increasing the possibility of a return to “currency wars.” Last week, ECB President Mario Draghi unveiled a promise to buy purchase asset-backed securities (ABS) and covered bonds which will effectively add 1 trillion euros ($1.29 trillion) into the euro zone’s flagging economy, according to some analysts. With more liquidity in the system and Draghi still pondering whether to launch a Federal Reserve-style government bond purchase program, the euro is expected to continue to depreciate against its peers. And this is where the problem lies, according to economists. More