Global central banks were back in the spotlight on Thursday, as the Bank of Japan (BOJ) finally decided to emulate the U.S. approach to the economic crisis. By engaging in unprecedented aggressive monetary easing, Tokyo is throwing the kitchen sink at deflation. This time, neither the Federal Reserve (FED) nor the European Central Bank (ECB) were able to match the boldness of the BOJ. However, there are signs that things could soon change, at least in Frankfurt, as the ECB risks being left behind in a race to the bottom.

Looking at the FED in Washington, central bank watchers continue to engage in their favorite exercise, i.e, trying to determine when Chairman Ben Bernanke decides to lift the foot off the gas pedal of ultra loose monetary policies. There is no shortage of contradictory signals. Some observers see the FED slowly abandoning quantitative easing in the summer. Others are more skeptical about the willingness of the Federal Open Markets Committee (FOMC) to soon abandon the aggressive bond-buying program. The debate will stay with us for some time.

As recent data continue to suggest, the U.S. economy has not yet reached what economists call “escape velocity.” In other words, it is still unclear whether the goal of unassisted, self-sustaining growth can be achieved this year. As long as that is not the case and inflationary pressures remain subdued, it is fair to assume that the FED will continue to pump liquidity into the system. In an ongoing effort to calm critics, the U.S.’ central bank will also continue to stress that it has the tools to address asset bubbles, should they arise. Let’s hope it’s true.

One drag on the U.S. economy remains Europe. This is most likely where the biggest risks to the global economy still come from. With France’s outlook rapidly worsening, economic weakness has reached the core of the euro zone. Mario Draghi, the head of the ECB, admits that the gradual recovery he expects for the second half of 2013 may not materialize. The ECB is watching the experiments undertaken by other central banks with a weary eye. On the day of the Bank Of Japan’s dramatic announcement, Draghi felt compelled to confirm that he too is thinking about further unconventional steps. In particular, he is looking for ways to help those small- and medium-sized companies in the periphery of Europe that still have difficulties accessing credit. In some countries (Spain and Italy) they account for about half of all employment.

Many observers think that the ECB could start by lowering interest rates, probably as early as next month. But low interest rates are already not being fully transmitted to the periphery today. Why should that be expected to change in the future if the ECB decides to cut rates for the main refinancing operations from the current level of 0,75% to, let’s say, 0,25%? I haven’t heard a convincing answer.

But if traditional rate setting policies don’t guarantee success, would new non-standard measures be able to? Probably not. Even a new, unconventional FED inspired bond-buying program is no guarantee for success.

First, it’s still unclear whether the Fed’s policies will ultimately push the growth of the U.S. economy into a higher gear. Bernanke’s approach prevented a financial and economic catastrophe in the wake of the Lehman collapse. However, that very approach could be ill suited to address structural weaknesses.

Second, unlike many companies in the U.S. that use capital markets for funding, SME’s in Europe still rely on banks for credit. Europe needs more than ebullient bond and equity markets. It needs healthy banks. As long as the transmission channel from the ECB to companies and consumers continues to need plumbing, the economy will continue to face headwinds.

The ECB could further relax collateral rules or launch a new tranche of its longer term refinancing operation (LTRO) for banks. However, would those measures be bold enough to change the gloomy and risk adverse mood in the periphery?

Last but not least, the ECB has to act within its mandate. It simply cannot decide to stimulate specific parts of the economy (unlike the FED for example, which is helping the housing market by buying mortgage backed securities). “One should always be mindful of what the ECB can do and cannot do” Draghi said on Thursday.

For now, all the president of the ECB can do is to urge European political leaders to create a more resilient financial architecture. This means implementing the banking union sooner rather than later.

In the short term, Draghi will watch the effects of the aggressive monetary policies of other central banks. He says he is prepared to act. It will require a lot of creativity on his part to find a way to boost the confidence of a continent gripped by increasing gloominess.