ECB dives in, but will it sink or swim?

The world's financial markets are still digesting Thursday's announcement by the European Central Bank (ECB) that it will begin purchasing about 60 billion euros ($68.4 billion U.S.) of bonds each month until September of next year, and possibly longer.

In a press statement, the ECB said its Governing Council made this decision after indications that actual and expected inflation in the eurozone was drifting toward historic lows, creating a situation that it said "required a forceful monetary policy response."

Injecting money into a fading economy is not a new concept. The U.S. Federal Reserve initiated a quantitative easing (QE) program during the depths of the Great Recession, as did the British and Japanese central banks, to varying degrees of success. But the ECB's actions do raise a wide variety of questions.

Why is this necessary now?

"The reason that you do quantitative easing is that you've run out of options in terms of monetary policy," Campbell Harvey, professor of finance at Duke University, told CBS MoneyWatch.

When faced with a faltering economy, the usual monetary policy is to reduce interest rates, which in turn make investments more attractive and potentially increase overall economic activity and employment. But in Europe, where interest rates are already at rock-bottom lows, quantitative easing is another, albeit unusual, method of injecting money into the eurozone economy.

Also, some eurozone countries have huge deficits, and the crippling interest on that debt has left them with few options when it comes to slashing those deficits. "So if you reduce interest rates by buying these bonds," said Harvey, "that effectively reduces the debt ... and potentially allows some of these countries to reduce their overall indebtedness."

What might happen if the ECB's QE program doesn't succeed?

The European debt crisis has been going on for years. And while the region has seen some economic recovery, much of the EU is still dealing with widespread recession, political unrest and high levels of unemployment. There's also renewed talk that Greece, one of the region's economically weaker members, could exit the eurozone and abandon the common currency.

If the ECB's action doesn't jump-start the eurozone economy, it could end up with the scenario economist Desmond Lachman with the American Enterprise Institute for Public Policy Research recently outlined in The Hill magazine in reference to a possible Greek exit from the eurozone:

It would also clearly signal to depositors in the rest of the eurozone periphery that euro membership was not irrevocable and that the European Central Bank (ECB) was not always there to act as a lender of last resort to their banks. This will all too likely fuel capital flight from these countries and cause markets to again focus on their precarious public finances.

How does this differ from the U.S. Federal Reserve's QE program?

The Fed responded rapidly and, some would argue, effectively when it enacted quantitative easing. But it has taken the ECB several years to come to this decision, leading some observers to say the action may be too little, too late.

Part of the problem is the ECB's complexity: While it administers the eurozone's currency and monetary policy, it must also contend with the central banks of its 19 EU members. And even though the Fed offered monetary support to the U.S. economy by purchasing billions of dollars in mortgage-backed securities and U.S. Treasury bonds, "it's inconceivable that the Federal Reserve would be out there buying debt issued by, let's say, the state of Michigan or the state of Illinois or the state of California," said Duke's Harvey. "That is just not an option. Whereas that's exactly what's happening with the current QE that the ECB announced."

How is the the ECB's stimulus push being received?

Overall, the new QE initiative is getting favorable, if cautious, reviews from financial analysts.

"QE is not a silver bullet for the Eurozone's many problems," wrote Howard Archer, chief U.K. and European economist at IHS Global Insight, "but it should provide some limited help to growth by adding to the stimulus that is already coming from very low oil prices and the markedly weaker euro."

"Overall, we think the ECB's QE programme will benefit the eurozone economy by reducing the risk of deflation; however, it is not a panacea for the monetary union's ills," Azad Zangana, senior European economist and strategist at London-based Schroder Investment Management said Thursday.

"Deep structural reforms are required in order to raise Europe's potential trend growth," he added. "Without structural reforms, the ECB may be forced to add additional stimulus in the future as growth falters again."

How does the ECB program affect U.S. businesses and consumers?

The U.S. is unique in that less than 15 percent of its GDP is derived from exports of goods and services, compared to nearly 26 percent for the eurozone. And given the ongoing economic recovery, the U.S. is a "vast island in the midst of this global economic turmoil," noted Harvey.

But America's economy is increasingly globalized, and Americans ignore what's taking place with the eurozone at their peril. Taken as a group, the EU countries ranked as the second-largest export market for the U.S. in 2013. And as the U.S. dollar gains value against the euro, it raises the price of U.S. exports and hampers American companies' competitiveness in the eurozone.

Still, if the ECB's strategy ultimately proves successful, everyone wins.