ECB buying bonds for 60 billion a month Borsa ok … Dragons – BBC

ECB buying bonds for 60 billion a month Borsa ok … Dragons – BBC

bazooka anti-deflation

Milan , January 22, 2015 – 14:43

     
     
 

The Quantitative Easing there. The “bazooka” Mario Draghi, ECB president, foresees € 60 billion per month of new money to boost the economy, with purchases conducted until September 2016. From March, the ECB will start to buy securities on the basis of the share of the various countries in its capital. The new program includes abs and covered bond purchases, as well as government bonds.
The purchase of government bonds by the ECB will be operated in accordance with a risk-sharing with the national banks of the countries concerned, therefore, only a portion of any losses will be shared: in particular, only 20% will be at risk load of the ECB, the rest borne by the central banks. The purchases of government bonds on the secondary market made by the ECB will have a “double limit” of 33% for the debt of each issuer and 25% for each issue. The maturity of the securities to buy will vary from 2 to 30 years, thus bond short, medium and long term. The stock market reacted immediately with a blaze, while the spread is in sharp decline.

A push to the ECB decision was also disappointing trend in prices, with expectations of falling inflation. “The measures will help against the risks to inflation expectations, given very low or negative in the coming months.” Inflation will rise “gradually” in 2015 and 2016. “Looking forward, the increasing decline in the oil price should lead to an improvement in the balance sheets of households and firms.” For this reason the extent of Qe will last until September 2016, and “will continue to be held until we see a significant rise in inflation Camera, below but close to 2%” (in December, prices in the eurozone have clocked a -0.2%).
Qe will eventually push more strongly the prices in some local situations and specific but “we do not see bubbles,” said Draghi. Rather, the measure will help banks continue to “rebalance portfolios, changing bond with cash ‘and this wil l lead institutions to grant more credit and loans to households and businesses.

shadow carousel

 
 

Draghi, the maxi-purchase securities in the foreign press from around the world

 

Decision “a large majority”

Draghi also explained how there was the debate in the council of the ECB, “The meeting was unanimous in declaring that the purchase is a true instrument of monetary policy, in the legal sense. It was established that the principle is a cash instrument that can be used under certain conditions but it is still one of our instrument. There was a large majority in favor of start it now, and it was so large that it did not do a vote. There was a good discussion on the need to act now. And there was also consensus on the distribution of risk to 20%. ” In any case, “the program does not provide for any special rule for Greece,” Draghi responded to a question about Athens, that someone thought could be excluded from the purchase of bonds. It added that it is also contemplated the purchase of securities with yields fell into negative territory. There is an exception, which allows you to buy securities rated speculative but only i n the presence of an assistance program (the Troika, ed ).

La ECB headquarters in Frankfurt

What the measure ‘unconventional’ was coming – after the signs come in recent weeks by the same board members the European Central Bank – had been somewhat anticipated by the note of the ECB informing that would come “further monetary policy measures” after the announcement of the rates unchanged at 0.05%, and that would have been disclosed in the context of the traditional press conference at 14.30, actually began with a few minutes late, “Excuse me a lot, were the elevators that did not work,” he joked Dragons coming into the crowded room of reporters.

Pier Carlo Padoan, Minister of Economy (AP)

“The Qe is a good thing for Europe and Italy,” said CNN Minister Economy Minister Pier Carlo Padoan, before the announcement by the Central Bank. In particular, Italy ‘needs Qe to ward off the risk of deflation, “but in the same way’ needs fiscal consolidation and structural reforms. All three of these things are necessary. ” Asked if the Qe, can be a disincentive for Italy to continue the reforms, the minister replied that: “Three years of recession have an incentive strong enough” to go on. “We’re doing a series of structural reforms as quickly as possible, but what I think is that structural reforms work best when the economy works better.”

Chancellor Angela Merkel, shortly before the announcement of Draghi, had returned to warn partners Europe: “Whatever the decision of the ECB policy makers must not be distracted from taking the necessary steps to ensure the recovery,” he said from Davos specify, however, to “respect the autonomy” of the ECB.
Even Draghi called for structural reforms are implemented quickly and efficiently. Monetary policy “helps to support economic activity,” but “it is crucial that structural reforms are implemented quickly, in a credible and effective: this will not only increase the future sustainable growth” in the euro zone, “will also serve to increase investments, “he said. “Speed ​​is essential.”

January 22, 2015 | 14:43

© PLAY RESERVED