NEW YORK (TheStreet) -- Three months ago, Mario Draghi, president of the European Central Bank, set the bank on a path to lower the value of the euro. At the time, the market value of the euro was about $1.36.
The concern at that time was about the continuing disinflation of the eurozone and the possibility that the European continent was heading for a recession.
The value of the euro has dropped since then, just breaking $1.32 around Aug. 20.
The reason for this decline: Italy was declared in a recession after the 2014 second quarter GDP numbers were announced. German growth for the first half of the year was flat. And the French economy was doing so badly that French president Francois Hollande had to re-structure his government to try to reform his country's economy.
Now, the spotlight is back on Draghi and the ECB, which has a policy meeting this Thursday.
The question is -- given all the bad news that has been reported over the past month -- what will Draghi and the ECB do to combat the looming eurozone recession and a possible Japan-like stagnation?
The first thing to come into anyone's mind these days is for Draghi to emulate the Federal Reserve system in the U.S. and move to a policy of quantitative easing.
Draghi has seemed reluctant to make such a move.
Although Draghi has stated in the past that he would do whatever was necessary to spur on the economies of Europe and keep the currency union together, he has dragged his feet concerning the move to quantitative easing.
For one thing, as Draghi looks toward America, he sees that in terms of boosting on economic growth, quantitative easing has done practically nothing.
If anything, quantitative easing has provided support for the banking system and helped the regulators to eliminate troubled banks and reduce the size of the banking system in an orderly fashion. This effort has gone amazingly well.
But quantitative easing has also helped to propel the American stock market upwards and keep the lid on longer-term interest rates. The Standard & Poor's 500 (SPY) stock index has penetrated the 2,000 ceiling for an all-time high, and the yield on the 10-year U.S. Treasury note, which was expected to run up above 3.00% this year, now rests around 2.35%.
Draghi has seen the liquidity provided by the Fed's quantitative easing go into and remain within the financial sector of the economy, with very little spilling into the production sector.
In addition, Draghi has become more vocal about the role that the governments of the individual countries can do to reform their economies. Japanese stagnation may be an example of what must occur before a country can really be competitive within the global economy again.
Matteo Renzi, the prime minister of Italy, is intent on trying to bring the Italian economy into the 21st century. The upheaval within Hollande's government in France is seen as another possible opportunity for European restructuring.
With these governmental changes, there is continued recognition that the eurozone needs to form into more of a political union if the euro-currency region is to be fully successful.
But reforming government and economies takes time, something that the eurozone does not seem to have now.
All the pressure seems to fall back onto Draghi and the ECB.
But maybe Draghi might not move to a quantitative easing program, in which the central bank acquires the sovereign debt of member nations. One suggestion is for the ECB to purchase asset-backed securities -- bundles of repackaged loans.
The ECB does not have a detailed program in place to present at this time. But the ECB could announce it is going to purchase ABS in the future and will provide the details later.
A lot of mystery surrounds the meeting coming up on Thursday.
The financial markets seem to believe that the ECB will do something, and that something will be expansionary.
At 11:00 am in the U.S., the value of the euro dropped to about $1.320, the lowest it has been recently. Betting seems to be on the some form of ECB loosening.
At the time of publication, the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.