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Race To Save Japanese Hostages; Yemeni Government, Houthis Agree On Tentative Ceasefire; Microsoft Unveils Windows 10, Windows Holographic; The Future of the Photograph; European Central Bank Announces Quantitative Easing Plan

Aired January 22, 2015 - 8:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

KRISTIE LU STOUT, HOST: I'm Kristie Lu Stout in Hong Kong. And welcome to News Stream where news and technology meet.

Now a tentative ceasefire is holding in Yemen, but only just. We'll look at how the country got to this point.

Mario Draghi is expected to announce a European stimulus plan in about 30 minutes. We'll bring his comments to you live when it happens.

And Microsoft unveils the future of Windows holograms.

We begin this hour in Yemen where a tentative peace deal between the government and Houthi rebels has been reached, but mistrust on both sides

could derail it.

Now the government has agreed to make changes to the constitution, giving Houthis more political power. In exchange, the rebels agreed to

leave their posts outside key government buildings, including the presidential palace.

Both sides appear to be waiting for the other side to make the next move.

Now senior international correspondent Nick Paton Walsh has been following developments from inside Yemen and filed this report.

(BEGIN VIDEOTAPE)

NICK PATON WALSH, CNN INTERNATIONAL CORRESPONDENT: This morning it's still unclear who is in charge of one of the U.S.'s key counterterror

allies, creating a new national security concern for the U.S.

These men, Houthi rebels, are said to be pulling back. But the president whose home they've been surrounding, a key U.S. backer against al

Qaeda, is he still calling the shots?

Elected president Abd Mansur Hadi and Houthi rebel leader Abdul Malik al-Houthi jockey for power.

So many key buildings, including the presidential palace overrun by Houthi rebels vying for radical political change.

Just yesterday, the two sides reached a deal granting the rebels more political power in exchange for withdrawing their militias, but the

tentative agreement just that, tentative.

The Houthis are themselves a target for AQAP, but still this death to America among their slogans.

The ongoing political turmoil in the midst of a war on terror strikes fear in the hearts of U.S. officials.

BOB BAER, FOREIGN POLICY ANALYST: Are we going to see a state where there is no central government to speak of, which means that al Qaeda will

have an even stronger base?

WALSH: Some U.S. officials say it's too dangerous for the hundreds of Americans inside the U.S. embassy.

SEN. ANGUS KING, (I) MAINE: I think we ought to get our people out. I don't want to see a hostage situation.

(END VIDEOTAPE)

LU STOUT: And that was senior international correspondent Nick Paton Walsh reporting from inside Yemen.

So, who are the Houthis? Now Houthi rebels have been battling Yemen's government off and on for more than a decade. The Houthis are Zaidiyyah

Shia, a branch of Shiite Islam that exists almost solely in Yemen and say they feel marginalized in the majority Sunni nation.

Now, Houthi rebels seized control of the capital of Sanaa in September, demanding greater political influence. And since then, they've

advanced further into central and western regions of the country where they've battled Sunni tribes and al Qaeda fighters.

Now, Japanese officials are up against the clock to the save the lives of two Japanese citizens held captive by ISIS. Now the terror group says

it wants $200 million in ransom by Friday or it will execute the two men.

Now with less than 24 hours to go before that deadline, Japanese officials say that they are still scrambling for a way to contact the

militants.

Now for more, here's CNN's Will Ripley.

(BEGIN VIDEOTAPE)

WILL RIPLEY, CNN CORRESPONDENT: The fact that the Japanese government is saying it wants to open a line of communication with ISIS is

significant, because it shows that right now Japan is working to secure the release of those two hostages and is at least willing to talk to the terror

group about their demand of $200 million by Friday or else.

Hours after making this Kenji Goto disappeared. It was late October and the Turkish-Syria border. The Japanese journalist was about to make a

dangerous journey into ISIS-controlled territory.

Goto makes clear he doesn't want the people Syria held responsible for any trouble. He's determined to tell their story.

KENJI GOTO, JAPANESE HOSTAGE: Syrian people suffering three years. It's enough. So, I would like to get the story of (inaudible).

RIPLEY: Goto's long-time Syrian fixer, who took this video, says he warned him not to enter the ISIS stronghold of Raqqa.

ALAAEDDIN AL ZAIM, SYRIAN FIXER FOR JOURNALIST KENJI GOTO: I tell him it's not safe for you. It's very danger.

RIPLEY: Alaaeddin Al Zaim says Goto didn't listen. He chose to go knowing his fixer couldn't guarantee his safety.

Goto gave him this piece of paper, contact information for his friends and his wife, the mother of his young children.

Al Zaim called her one week later.

UNIDENTIFIED FEMALE: So that's a very hard phone call to make, right, call the wife ...

AL ZAIM; I know that. But when I call her, she's very strong woman. And he is also is very strong. He -- anytime he want to do his job very

well. If he's danger or he don't afraid from -- sometimes we're going to danger places. He don't afraid. He tell me, this is my job. I am

journalist. I have to do that.

RIPLEY: Al Zaim is haunted by these images of Goto and his friend and fellow hostages Haruna Yukawa, the ISIS executioner threatening to murder

two innocent men in a matter of hours if Japan's government doesn't pay.

(END VIDEOTAPE)

LU STOUT: The clock is ticking. CNN's Will Ripley joins me now live from Tokyo. And Will, the deadline is approaching for these two men. What

is the Japanese government doing right now to secure their release?

RIPLEY: They are trying desperately, Kristie, to get a hold of ISIS, to open up some kind of line of communication. We just got off the phone

with the prime minister's office and the ministry of foreign affairs. And at this late hour, they still have not been able to contact ISIS. They're

reached out to Turkey and Jordan to see if they have sources, intelligence, any way to try to get a line of communication open and perhaps buy these

two men some more time as we now have a deadline that's less than 24 hours away. So much fear here about what's going to happen tomorrow if

communication is not reached, Kristie.

LU STOUT: Yeah, so much fear about what could come next. And the issue of should Japan pay the ISIS ransom. How is that issue being debated

there?

RIPLEY: Well, as you know Japan has never officially paid a ransom for the release of hostages, but there have been incidents -- one in 1999,

one in 2004 -- where it was -- there was speculation and some reports that perhaps under the table a deal had been worked out to secure a hostage's

release. So it wouldn't be unprecedented if Japan were going to put money on the table.

But there's a real dilemma here. Obviously, everybody in this country wants to see these men, desperately wants to see them come home safely.

But there's also fear if you put money in the hands of a brutal group like ISIS, millions of dollars potentially, then what are they going to do with

that? Does that give them more tools to hurt more people and that's the real struggle here and we don't know what the answer is going to be yet,

Kristie.

LU STOUT: And Will remind us, why were these two Japanese men targeted by ISIS? What role has Japan played in the fight against the

militant group?

RIPLEY: So, Prime Minister Abe who is now back in Tokyo was on a Middle East trip where he pledged $200 million to support the coalition

that's fighting ISIS, but made very clear as Japan is a pacifist country that doesn't engage in military action aside from self-defense that that

money was to help the refugees, humanitarian aid, people whose lives have been turned upside down by ISIS.

But then the terror group just two days after the prime minister made that pledge, pulled out these two hostages who had been captured last year

and demanded $200 million -- perhaps a symbolic figure, certainly unrealistic, that that kind of money would be able to be pulled together in

three days. But clearly sending a message of warning to any country that dares support any coalition that tries to fight ISIS.

Japan, by the way, though, standing firm, saying no matter what happens that money is still going to the people who need it, who are

affected by all that ISIS does in that region in turmoil.

LU STOUT: Yeah, meanwhile time is of the essence to save these two men. CNN's Will Ripley reporting live from Tokyo, thank you very much

indeed for that, Will.

Now the conflict in Eastern Ukraine has cost more civilian lives. In Donetsk where pro-Russian separatists are in control, a trolley bus station

was hit by artillery shells. Now the city council says seven people were killed. A statement on its website says across Donetsk, 10 civilians have

been killed by shelling in the past 24 hours.

Ukraine accuses Russia of supporting the rebellion and feeding the ongoing violence in Eastern Ukraine.

Now President Petro Poroshenko spoke in Davos on Wednesday and he brought a piece of what he says is evidence of Russian involvement. It was

a piece of wreckage from a bus attack earlier this month. Take a listen.

(BEGIN VIDEO CLIP)

PETRO POROSHENKO, PRESIDENT OF UKRAINE (through translator): I have here part of the Volanavaka (ph) bus. With the heat of the fragments of

the Russian missiles which hit in my people. And for me, this is a symbol, symbol of the terroristic attack against my country.

(END VIDEO CLIP)

LU STOUT: Now Russia continually denies its soldiers are involved in the separatist movement in eastern Ukraine.

Now still to come right here on News Stream, a major announcement is expected from the European Central Bank. We'll take a look at what it

means for Europe's struggling economy this hour.

Plus, we break down Microsoft's bold vision behind its new holographic goggles.

(COMMERCIAL BREAK)

LU STOUT: Welcome back.

Now this is the second and last day of historic talks aimed at restoring diplomatic ties between Cuba and the United States.

Now the old Cold War rivals got Wednesday's talks off to a bumpy start with a class over U.S. immigration policy.

Now a top Cuban official accuses the U.S. of stealing its best and brightest by allegedly enticing them away when they visit foreign

countries.

Now these negotiations, they come hard on the heels of U.S. President Barack Obama's appeal to congress to seize the chance to end the U.S. trade

embargo against Cuba.

Now the treatment of Cuban dissidents will be a major test of what some are calling a new era between Washington and Havana. Now, CNN's Karl

Penhaul reports from the Cuban capital.

(BEGIN VIDEOTAPE)

KARL PENHAUL, CNN INTERNATIONAL CORRESPONDENT: A chant to free Cuba's political prisoners. Then, the ladies in white march like they do every

Sunday in silence.

Haydee Gallardo was one of 53 opposition dissidents just freed from jail as part of a deal between the U.S. and Cuba.

"It was like being in the depths of hell, the suffering made me a little crazy, but my husband and children wrote to me and that kept me

going," she said.

Gallardo and her husband Angel were arrested at a small anti- government demonstration in May 2014. Their crime, they say, chanting down with Fidel Castro.

"Education for Cubans has been about fear and how to be afraid, about how to avoid confrontation with the authorities because they have power.

They teach you what they want you to know, but not really what goes on in the world," he said.

Both were released on January 8, according to their prison papers. The pair spent eight months behind bars and what they say were appalling

conditions.

"I once saw rotten frogs in the drinking water. The food was terrible. I called the soup stew made of scraps. It was like pig food,"

she says.

Both complained of psychological mistreatment. Figueredo said he had been beaten, too.

"They beat me several times and my jaw was dislocated. State security puts a person in your cell posing as a common criminal. His job is to beat

people like me, the counter revolutionaries," he says.

CNN did ask the Cuban authorities to comment on the dissident release, but they declined to respond. Routinely, Cuba denies holding political

prisoners describing them instead as mercenaries.

Some opposition groups or individuals have conceded receiving some funds from the United States, others even admit having tried to help the

CIA against the Communist government.

This husband and wife are unbowed by their hard jail time. They flatly reject moves by the U.S. and Cuba to restore diplomatic ties, even

though they're now free thanks to that thaw.

"Cuba needs the Castros to leave power. We need a free Cuba without the Castros, a radical change without the Castros. That's what Cuba

needs," she says.

It's a message echoed by this small group of supporters, two finger protest L for liberty and a whisper for change. Cuba yes, Castro no.

Karl Penhaul, CNN, Havana.

(END VIDEOTAPE)

LU STOUT: Microsoft has unveiled Windows 10 and its new features. It is the first major operating system upgrade since Windows 8, which was not

well received. But Windows 10 has got people excited.

Now as we mentioned yesterday the new operating system, it will work across desktops, laptops, tablets and smartphones. A new XBox App will let

users stream their games to other devices.

Now Windows 10 also brings back the start menu that disappeared in Windows 8. And if you currently have that old version, the new operating

system will be available as a free update.

But the biggest buzz is about Holo Lens, it's a special headset to interact with Windows Holographic.

Now here's how Microsoft is touting this new vision for computing.

(BEGIN VIDEO CLIP)

ALEX KIPMAN, MICROSOFT: This is the first fully untethered holographic computer.

We invented a third processor, a holographic processing unit. The HPU gives us the ability to understand where you're looking, to understand your

gestures, to understand your voice. It gives us the ability to spacially map the entire world around us and to run without any wires...

(END VIDEO CLIP)

LU STOUT: Now, Microsoft did not give a precise date for wen Windows Holographic and the Holo Lens would come to market.

And I want to bring in Tom Warren now. He's the senior editor for The Verge. He joins us via Skype from Seattle, Washington.

Tom, thank you for joining us, especially so early in the morning there.

Let's get straight to Holo Lens. I mean, you got to try it out. What is it like?

TOM WARREN, THE VERGE: Yeah, I mean, I guess it was kind of similar - - so I tried on Oculus Rift a couple of years ago, so it kind of felt like the same or very similar experience to that. Essentially you put on a

headset around your head and then you're kind of immersed into this like crazy world of -- a blend of like the reality and these virtual jetsam on

the sort of screen in front of you that actually isn't there.

Essentially the first thing we looked at was like a miniature version of Minecraft, which is like a game where you can sort of build blocks and

break blocks. And they had it running -- like they had this crazy castle that just suddenly appeared on our coffee table.

So it's essentially using something called augmented reality. So it's placing objects into your field of vision, using this headset. And what

you can do is you can literally do like an air type gesture where you literally went like that and I could break blocks on the coffee table in

front of me. And what it would do is it would break the blocks through the coffee table onto the floor. And then I could peer through the coffee

table onto the floor. It was like kind of -- it was kind of insane. And it felt as if that was actually happening in the room, like the coffee

table was -- you know, the blocks were falling through the coffee table.

That was the kind of experience that we kind of got yesterday.

And there was also a demo where they had a Skype video call through it. So someone else was at the other end. And essentially the Skype video

call that I was having with this person, I had the headset on. I could see their little video like -- basically a popup in front of me. And they were

guiding me through fixing a light switch.

So I turned to the right and there would be exposed wiring on the wall. And then they would just start drawing on the wall. And just like

at the time I was like it just feels normal, but looking back now it seems kind of insane.

And then they were like guiding me through fixing a light switch.

And you can imagine the possibilities for that on the applications, essentially like...

LU STOUT: Yeah, certainly, certainly. The Skype demo sounds really impressive. The Minecraft demo sounds pretty cool.

We have to talk about Windows 10 while we have you. I mean, that's another big announcement. It's supposed to unite the mobile devices, PCs,

everything together. That sounds good in theory, Tom, but do you think it's going to work? I mean, will the same app work on a Windows phone and

a desktop?

WARREN: Yes. They didn't really explain fully about the apps. And they've talked about these universal apps and the idea of bringing them to

phone and PC and tablet. Essentially the idea is that they'll get developers interested in building an app because they can build it easily

across all three.

Essentially it would be -- imagine you had an Instagram app on Windows phone that would scale up to the tablet and scale up to the PC and at the

very core of it is the single application.

I think they talk about more of the sort of developer stuff around that later this year.

Will it work? They've had some serious problems trying to attract developers, especially on the mobile side and to be interested in their

products. I think this will help. I'm not sure if it will fully work. A lot of people -- a lot of developers are mainly making all their money and

interest because consumers just literally have Android and iOS at the moment. Windows phone is a small marketshare. It's still -- we're still

trying to see if people are interested in these new sort of modern apps on Windows. So I think -- I don't think what they showed yesterday will

necessarily answers that question. And they kind of -- they didn't really address that directly in their Keynote. It was more about this is Windows

10 across all of the devices rather than the actual, you know, the app situation.

LU STOUT: All right, Tom Warren, thank you very much for giving us the low-down on both big announcement -- Windows 10 and Holo Lens,

Microsoft Holographic. Thank you so much. Take care.

You're watching News Stream, still to come on the program, we head back to Davos for a look at a major announcement due from the European

Central Bank. What does it mean for the global economy? Our expert panel weighs in.

(COMMERCIAL BREAK)

LU STOUT: All right, coming to you live from Hong Kong, you're back watching News Stream.

Now earlier we talked about the quest by Microsoft to roll out holographic goggles. And in this latest segment of Tomorrow Transformed,

Richard Quest looks at how that technology can innovate the art of taking pictures.

(BEGIN VIDEOTAPE)

RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT: Photographs. They capture that moment in time and we all cherish them.

The heady days when we'd share these moments with family and friends, show them a photo album, or have a slideshow of our favorite holiday pics.

When the digital camera got rid of film, emailing photos became the way we shared memories. And we thought it couldn't get any easier.

Then, came the smartphone with the camera built in.

With the smartphone came the explosion of social media sites like Facebook, Twitter and Instagram. They allowed us to share our photos with

the world faster than you can say, cheese.

The future could look like this: sharing a different kind of photo, one that's 3D.

JAVID KHAN, CEO, HOLOXICA LTD: Every sci-fi fan knows that the best way to do 3D is using holographic technology. So that's where I started.

Holographic technology works on the principal of defraction. Defraction happens when light comes along and bounces of structures that

are about the same size as the light. And if you can design these structures very carefully, then you can persuade the light to do fantastic

things like form images in free space.

QUEST: Holoxica is developing technology that could take our snaps of skylines, statues and even spacemen into the third dimension. For Khan,

this is the natural progression for the photo.

KHAN: I believe that the future of the photo lies in three dimensions rather than two just because the world we live in is in three dimensions

and three dimensional images have far greater impact on our visual system because it's highly tuned towards 3D. And so it's just a natural way of

things to be.

I can imagine walking into your home in 10, 15 years time and seeing floating holographic images coming off the walls and video images coming

out of a holographic video display.

QUEST: Of course this is just one picture of what the future of photos and sharing might look like. The mistable (ph) has been developed

by a group at the University of Bristol in the United Kingdom. It allows images to hover while you manipulate them and send them to friends. Soon,

our care windows will be our camera and photo album with companies like Toyota exploring interactive screens for use while you're on the move.

Our love of taking a snap, a photo, a memory, that will never change. It's the way we share them that certainly will.

(END VIDEOTAPE)

LU STOUT: You're watching News Stream. And still to come on the program, we are waiting for that major announcement from the European

Central Bank. How that announcement could impact the struggling EuroZone economy straight ahead.

(COMMERCIAL BREAK)

LU STOUT: I'm Kristie Lu Stout in Hong Kong. You're watching News Stream. And these are your world headlines.

In Yemen, mistrust is hampering a tentative peace deal between the government and Houthi rebels. Now the government has agreed to make

changes to the constitution to give Houthis more political power. And the rebels agree to leave their post outside key government buildings, but both

sides appear to be waiting for the other to make the next move.

Japanese officials are scrambling for a way to contact ISIS to save the lives of two hostages. Now the terror group says it wants $200 million

in ransom by Friday -- that's less than 24 hours from now -- or it will execute the two men.

Ukrainian government forces have reportedly withdrawn from the main terminal of the airport in Donetsk. Now one official is quoted as saying

that does not mean the government is giving up the facility to separatists. Now in Donetsk, the city council says in the last 24 hours 10 civilians

have been killed in shelling.

Microsoft has surprised critics with this Windows 10 unveiling. The new operating system has been built to let users interact with holograms,

but it did not provide an exact release date for the Holo Lens headset.

Now, the European Central Bank is set to deliver this bold new program. And the expected plan here to buy government debt, to breathe

life into the struggling EuroZone economy. And or the very latest on this, let's get back to Davos Switzerland. Our business team is tracking the

story from the World Economic Forum. And Nina Dos Santos, host of The Business View joins us now -- Nina.

NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: Hi there, Kristie.

Well, obviously this is the dominant event of the day. Of course, it's not taking place here among the Swiss Alps, but instead it's taking

place in Frankfurt where the ECB is based.

So, about 45 minutes ago what we had is the interest rate statement that is completely normal. They kept interest rates on hold at their

current record low level of just 500 to 1 percent (ph), but the devil will always be in the detail of this statement here.

And this is where we're expecting Mario Draghi to unleash quantitative easing, a really new thing for the EuroZone, which remember isn't

structured like the United States and Japan, just one country those are to have to agree upon what level of quantitative easing is needed.

Here is to be far more different. They have 24 members of the governing council deciding on interest rates and also deciding on stimulus,

19 countries they represent.

Now, as we await the details from a press conference that Mario Draghi is about to give imminently over in Germany, let me introduce obviously

John Defterios who is here, our Emerging Markets editor; and also a former central bank governor for no less than 10 years. Jacob Frenkel, thank you

very much for joining us. Jacob Frenkel is the chairman of JP Morgan Chase international, but was also the governor of the bank of Israel between

1991, I believe it was and the year 2000. So for about a decade.

I'll start with you, as a former central bank governor, Mario Draghi has a really difficult task here. You didn't have 24 members on the board

to convince from different countries with different needs.

JACOB FRENKEL, JP MORGAN CHASE INTERNATIONAL: Well, of course it is a difficult task. He has to bring together diverse groups of members of the

council. And he needs to play very carefully and skillfully as he has been doing, because after all why? It is supposed to be a very professional

role. It is operating within a political milieu. And it is for a very serious task and stakes are high.

DOS SANTOS: Let's just talk about that political milieu, because I also want to bring our viewers up to date with the fact that concurrently

here in Davos we have the chancellor of Germany Angela Merkel speaking on a panel. And she's just made these comments here. She said that we continue

as Europe to be confronted by great challenges. We do have this somewhat under control, but we're not out of the woods. And she's also stressed

that reform is still needed. So this stimulus shouldn't take countries off reform.

John, that's the big thing, isn't it?

JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: And of course. And this screams out to me, Jacob, and this sort of context, Nina, that it's

austerity will continue. And many suggest that this pursuit of austerity during the -- after the global economic crisis is what brought Europe to

this stage right now.

I've never seen an announcement so defined by the media beforehand and analyzed by the bankers before it comes out. And I've not heard one person

yet say this is the right strategy, perhaps going to be limited to two years, perhaps it's not as big as the U.S. one when everybody said they

were pulling out the bazooka during the financial crisis.

Why is this six years too late? And the austerity causing severe problems, as you know, particularly in southern Europe.

And then we have that huge question. We have an election Sunday in Greece. They could basically lunge to the left and decide they're going to

try to get out of the euro. And then it puts a whole QE program into question, because you can have this unravel. Isn't that correct?

DOS SANTOS: And Jacob, yeah, let's talk about the United States. The lessons learned from the U.S. Are they positive, are the pertinent to this

example?

FRENKEL: They are of course relevant. But I just want to say one important point, which is the real recognition -- and there should be a

recognition, that why central banks all over the world have played a major role it's a mixed blessing. It's not healthy that central banks are the

only game in town, because by and large it is not monetary creation that will produce growth. What Europe needs is growth, what Europe needs is

lower unemployment. What Europe needs is productivity. What Europe needs is competitiveness and the ECB can not do it.

What the ECB can do is provide the breathing space so that governments can operate and should operate. And so it is in this regard -- it's not a

panacea.

But let's remember, also, that the ECB enters into this phase of action, it comes with a legacy of the United States. Also in the United

States I think there is an agreement that the quantitative easing played a major role when it was introduced, but with the passage of time, each round

of QE, of quantitative easing was somewhat less effective.

We arrive to the stage of diminishing returns where it was important to start now the exit. This is where the ECB comes in. In Europe, the

capital markets are much smaller than the banking sector, which is more important. In the United States, the capital markets are the transmission

mechanism. It's a more difficult task.

DOS SANTOS: So this is focusing on a much more narrow transmission mechanism, as you said. But at least they have managed to get the banking

problems in Europe in order. We have more mutual cooperation there, don't we?

FRENKEL: Well, I believe that ECB is doing the right thing, today. Let's put it in perspective. But by the same token, as we complement the

European Central Bank for acting and for doing something which is probably significant in volume, it is not a signal and should be interpreted as a

signal that the job is done.

DOS SANTOS: John, we understand that Mario Draghi is running about five minutes late, which in itself is actually rather unusual, as unusual

as this quantitative easing if, indeed it does come to pass.

DEFTERIOS: Well, in fact, it goes back to this point that even up to last night they were still defining the terms of the quantitative easing.

And I'm sure Jacob would suggest the same thing. I wouldn't want to have Mario Draghi's job right now. You have the entire north of Europe not so

embracing of this policy whatsoever.

DOS SANTOS: Stay with us, John. We're listening now to Mario Draghi who has just begun to speck.

(EUROPEAN CENTRAL BANK CONFERENCE)

DOS SANTOS: So, right as you can see there that's Mario Draghi delivering his statement there explaining the rationale behind a new plan

of quantitative easing. That is what we are expecting and that is what we've got.

These are the figures. I might say they're actually slightly bigger than what the market was expecting.

At the top end of expectations here. 60 billion euros per month of assets will be bought by the ECB until the end of September 2016. These

purchases will come in addition to existing programs to buy asset-backed securities and government bonds -- covered bonds, he said, as well.

The program will start as of March. And it'll carry on, also. This is the interesting bit about the timing that he was mentioning there.

Until the end of September 2016, or until the ECB sees some improvement in its race of inflation, which should head back towards the target level that

the ECB has of getting prices up to around about or below 2 percent in the medium term.

Remember that deflation is a real concern here after prices started to sink across the EuroZone just as of last month.

And also when it comes to the loft sharing, he did mention that, too, 20 percent of the potential losses that could be incurred by this program -

- which, by the way, will be coordinated centrally by the ECB -- will be shared with the national central banks.

Let's get some immediate reaction here from a former central bank governor himself, former governor of the bank of Israel Jacob Frenkel who

is with us.

So what do you make of that plan?

FRENKEL: Well, I find it to be significant. As you indicated, it is at the top range of what market expected. And in this regard, if there is

a surprise in it, it's a positive surprise.

Second element it was not limited in time. Even though it is taken to run until September 2016, as you indicated, depending on the circumstances.

And it focused what the circumstances are. There are where inflation will be. They see their primary role as ensuring inflation at or slightly below

2 percent per anum.

Of course, Draghi was sufficiently realistic and correct by noting that the main issue is the renewal of economic growth. And the main issue

is really to get Europe away from the slump where it is. He hinted, therefore, that there is a lot of things to be done by others. He did not

say explicitly this is not the job of the ECB, but the focus of inflation as the main objective of the ECB, coupled with the statement that growth

needs to be renewed, means that somebody else must also act. And that's a very important point.

The risk-sharing is also very important, even though it's limited in magnitude or whatever, there is here an issue which says -- I will not go

into to details, but there was a question about is the package going to enhance or decrease fragmentation within Europe? Is it only the game of

each and every central bank, or is it going to reflect the fact that they are belonging eventually to the same monetary authority?

DEFTERIOS: Is this what the 20 percent burden sharing is all about, then? You had to find a strike a balance here politically to suggest that

we have one supervisory body for the banking system right now. We can't leave these national governments hanging out and taking out this burden on

their own, because you'd have a very divisive bond market in that respect and risk-sharing.

DOS SANTOS: Personally, it sounds as though he's couched that beautifully. Would you agree?

FRENKEL: Well, I think it's very well, because we need to remember that while there is a monetary union and there are actions towards banking

union and supervisory union, there is no fiscal union and there is no political union. And when it comes to potential losses, they will need to

be addressed on the fiscal side for which there are no unions yet. And that's why it needed to be strike a balance between what propulsion is

shared and what is not.

DOS SANTOS: Let me just ask you quickly, John, he also referred that IMF program -- and that includes Greece, doesn't it?

DEFTERIOS: Yes. That's a very good point. Because he said anybody that's under an EU, ECB, IMF program right now can't participate in this

program. So, if you can go a step further in terms of definition of what this means, European Central Bank is waiting for the election to take place

on Sunday.

This gives the European Central Bank or the European Union some wiggle room here if the Greeks decide not to stay in or if they come back and say

they want some of that debt written off. They'll pay a pretty heavy price for it.

FRENKEL: Well, it's beyond waiting for what the elections will say. They are also sending a message to...

DEFTERIOS: Yeah, a pretty tough message...

FRENKEL: ...running for election, beware. This is what is at stake.

DOS SANTOS: Because you're also out of the system to a certain extent, at least at the moment.

FRENKEL: Well, if liquidity is an issue and access to liquidity is an issue, it's not a great plus to be cuffed as an outsider and a pariah.

DEFTERIOS: The other thing I was going to bring up, Nina, is that it comes at a very interesting time, especially at the World Economic Forum.

This time last year, they were talking about the final tapering by the U.S. Federal Reserve. If the U.S. Federal Reserve starts to raise interest

rates in the second half of 2015 you have this QE program coming in to place. Wouldn't it put additional pressure on the euro? And then it

brings into the package the Swiss National Bank and its policy to let that currency rise against the euro as well.

Big implications coming out of this decision.

FRENKEL: Well, that's an important point to emphasize, because whereas in the previous few years central banks stands all over the world

went in a harmonious same direction, we are now going into a situation where the U.S. is potentially reducing its easiness, Japan continues its

easiness and now the ECB jumps with the easiness. To diverging directions of central bank policies.

DOS SANTOS: And the Bank of England is poised to see reduce its monetary stimulus, too. So do you think that that will to a certain

extent, Jacob Frenkel, scuttle the viability of this plan? Will it undermine the viability of this plan the fact that it's five years out of

sync with everybody else?

FRENKEL: Well, in a way it may -- let me look at the bright side, which is a depreciation of the euro, which is the outcome, or might be the

outcome of easing of the ECB and less easing of the Federal Reserve, that depreciation helps Europe's growth. It helps Europe's competitiveness in

the market. A depreciation of the euro was needed and therefore it is in fact a plus. And the fact that they are coming late is one fact.

But on the other hand, the reason why the U.S. can now talk about withdrawal is because it started first. And in fact there is some good

news in it by telling the customers of the ECB if you are going to ride with us for that trip, look what is happening in the U.S. They also have

this ride. And eventually they are talking about withdrawal and exit. We will also be there, albeit a bit later.

DOS SANTOS: They're not just talking about withdrawal and exit, they're also talking about raising interest rates.

Christine Lagarde is in a panel just two hours ago said that she estimated the United States would raise rates at the end of this year

perhaps, even.

How would that sync with this policy here today? Because comprehensively, it is more than expected. It's over a trillion dollars

that the ECB has announced.

FRENKEL: Well, the U.S. Federal Reserve actually -- if it raises rates, many see in it very good news. It's not that people like to see

higher rates, but people like the signal that if the Federal Reserve that lowered rates to practically zero has sufficient confidence to raise rates,

it means that their assessment is that the U.S. is out of the woods and that the recovery takes hold.

It is in this regard a confidence building measure.

DOS SANTOS: Jacob Frenkel and also John Defterios, great to both have you here for some immediate live reaction from Davos there.

And as you heard there, Kristie, so we have that plan there. It's bigger than expected per month, bigger than expected as the whole. Some

loss sharing potentially further down the line, but it's a rather positive reaction there as you can see from former central bank governors. And I'll

give you buzz from Davos as the day progresses.

LU STOUT: Yeah, positive reaction in response to this very dramatic move by the ECB to save the EuroZone economy. And Nina Dos Santos joining

us live from Davos, thank you.

And that is News Stream. I'm Kristie Lu Stout in Hong Kong. And Nina will be back for much more on the ECB's decision live from Davos on World

Business Today. That's next on CNN.

END