Daily Archives: August 22, 2011

Claire Jones

The ECB settled €14.3bn-worth of government bond purchases last week, meaning that it bought that amount of debt between last Tuesday and the previous Wednesday.

The figure – down from the €22bn settled the previous week – takes the total amount of bonds bought through the securities markets programme to €110.3bn. Read more

Ralph Atkins

What exactly did Jens Weidmann, Bundesbank president, say when earlier this month he and other members of the European Central Bank’s governing council debated whether to  reactivate the ECB’s bond purchasing programme? He opposed the step, but has kept a discreet silence since.

A clue is offered in the Bundesbank’s latest monthly report, released on Monday. It notes that ahead of the July 21 eurozone summit, the interest rates on Spanish and Italian bonds had risen, but argues in the short term they would “in no way” have led to an unsustainable fiscal burden that required emergency action. Read more

Ralph Atkins

What could provide the eurozone with an effective backstop and ensure its financial stability? The lack of a safety net is the main reason why investors remain so nervous about Europe’s monetary union. In the US and UK, the central banks are seen - rightly or wrongly - as offering the ultimate defence.

With the European Central Bank only reluctantly buying eurozone bonds, and politicians split over common “eurobonds,” perhaps momentum might grow behind a proposal put forward by Daniel Gros, director of the Brussels-based Centre for European Policy Studies, and Thomas Mayer, chief economist at Deutsche Bank?

Their idea is that the European Financial Stability Facility, the EU’s new bail-out fund, should be given access to ECB liquidity – thus increasing substantially its potential firepower. Read more