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MNI SOURCES: Majority Sufficient For ECB's New TPI Tool

(MNI) London

Metrics used to decide whether to activate the ECB's new crisis tool will depend on the circumstances, officials say.

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A majority on the Governing Council will be sufficient to activate the European Central Bank’s new Transmission Protection Instrument, with decisions to be based on a varying range of indicators depending on the circumstances, Eurosystem sources told MNI, adding that fallout from fiscally irresponsible policies would not qualify as meriting assistance.

The choice of market metrics to determine whether bond spreads are detached from economic fundamentals and interfering with the transmission of monetary policy will be decided on a case-by-case basis, one official said, noting that consideration of the eligibility for TPI would first depend on the four conditions of financial sustainability set out by the ECB.

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A majority on the Governing Council will be sufficient to activate the European Central Bank’s new Transmission Protection Instrument, with decisions to be based on a varying range of indicators depending on the circumstances, Eurosystem sources told MNI, adding that fallout from fiscally irresponsible policies would not qualify as meriting assistance.

The choice of market metrics to determine whether bond spreads are detached from economic fundamentals and interfering with the transmission of monetary policy will be decided on a case-by-case basis, one official said, noting that consideration of the eligibility for TPI would first depend on the four conditions of financial sustainability set out by the ECB.

Keep reading...Show less