Mario Draghi called on the European Central Bank (ECB) to makeits biggest push yet to fend off deflation and revive the economyby unleashing a debt-buying spree of 1.1 trillion euros (US$1.3trillion).

The ECB president and his Executive Board proposed spending 50billion euros a month through December 2016, two euro-areacentral-bank officials said. The plan still faces a tense debate inthe Governing Council and may change before the final decision onThursday, the people said, asking not to be identified as the talksare private. An ECB spokesman declined to comment.

By urging Fed-style quantitative easing (QE), Draghi isremodeling the ECB as an aggressive central bank that will takerisks even against the wishes of Germany, the region's biggesteconomy. Bundesbank President Jens Weidmann and Executive Boardmember Sabine Lautenschlaeger have argued QE isn't needed andreduces the incentive of governments to make structuralreforms.

The proposal “looks larger than implied by the ECB's previouscomments about the size of its balance sheet,” said RiccardoBarbieri Hermitte, chief European economist at Mizuho InternationalPlc in London. “A lot will depend on the risk-sharing features ofthe program.”

Draghi's intention is to expand the ECB's balance sheet to thelevel seen in early 2012, or about 3 trillion euros. While thecentral bank has assets of about 2.2 trillion euros currently, thatmay shrink as 200 billion euros of outstanding long-term loansmature in coming weeks.

The ECB chief is scheduled to hold a press conference at 2:30p.m. in Frankfurt on Thursday to announce the Governing Council'sdecision.

The council's debate will be complicated by arguments overwhether the risks incurred in the new bond-buying plan should beshared across the region's 19 central banks or kept within nationalboundaries. Dutch central-bank Governor Klaas Knot has said anydecision to mutualize risk should be taken by elected politicians,not unelected central bankers.

The tension over that issue surfaced this week at a conferencein Dublin. Irish Finance Minister Michael Noonan said havingnational central banks buy government bonds would be“ineffective”—drawing a response from ECB Executive Board memberBenoit Coeure.

“The discussion is how to design it in a way that works, in away that makes sense,” Coeure said. “If this is a discussion abouthow best to pool sovereign risk in Europe, and how to make thepooling of sovereign risk take a step forward in an environmentwhere the governments themselves have decided not to do it, thenthis is not the right discussion.”

Governors must also decide what assets to buy. While the programis likely to focus on government debt, other assets such ascorporate bonds are under discussion, one of the people said.Purchases won't start before March 1, the person said.

“We need the ECB to do more, and we need the ECB to decidetomorrow,” Jean-Claude Trichet, Draghi's predecessor, said in aninterview broadcast on CNBC today. “But to think the ECB has amagic wand and will change all the situation in Europe by its magicwand, in my opinion, is not the appropriate reasoning.”

–With assistance from Jeff Black, Jana Randow and Scott Hamiltonin Frankfurt.

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