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MNI SOURCES: ECB Focussing On Conditions For New Crisis Tool

(MNI) London
Sintra, Portugal (MNI)

Agreeing on conditions for the ECB's planned new anti-fragmentation tool won't be easy, sources say.

True

European Central Bank officials are likely to consider a range of possible new tools to address any blowout in eurozone spreads at its next meeting on July 21, with debate on committees now preparing the proposals focussing on how to make countries requiring assistance pledge to improve their finances and on how long bond purchases could continue, central bank sources told MNI.

While the ECB has said it will use reinvestments from its Pandemic Emergency Purchase Programme to cap spreads if necessary, officials acknowledged that a new tool with greater firepower could be necessary if the government bonds of a country like Italy were to come under sustained pressure.

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European Central Bank officials are likely to consider a range of possible new tools to address any blowout in eurozone spreads at its next meeting on July 21, with debate on committees now preparing the proposals focussing on how to make countries requiring assistance pledge to improve their finances and on how long bond purchases could continue, central bank sources told MNI.

While the ECB has said it will use reinvestments from its Pandemic Emergency Purchase Programme to cap spreads if necessary, officials acknowledged that a new tool with greater firepower could be necessary if the government bonds of a country like Italy were to come under sustained pressure.

Keep reading...Show less