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Lagarde Reportedly Outlines Triggers For New Anti-Fragmentation Tool

ECB

Bloomberg cite sources in reporting that ECB's Lagarde told ministers that the ECB plans to put a limit on bond spread, and that the tool would address irrational market moves.

The sources report goes into some more detail on possible triggers for the policy:

  • "the European Central Bank’s new anti-crisis tool will kick in if the borrowing costs for weaker nation rise too far or too fast"
  • "new mechanism that central bank officials are devising is intended to prevent irrational market movements from putting pressure on individual euro nations "
  • "She said the instrument may be triggered if bond spreads widen beyond certain thresholds or if market movements exceed a certain speed. Lagarde did not specify whether those limits would be made public."

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