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This article was published on 22 January 2015 to 13:47 hours.
The last modified on 22 January 2015 to 23:08 hours.
The Quantitative easing has also arrived in the Eurozone. The ECB has in fact decided to launch a plan of purchases of government bonds by 60 billion euro per month, which will start next March and will continue “until at least September 2016,” and in any case until inflation will return to levels considered consistent with its objectives (ie close to 2%). The plan as a whole, therefore provides for purchases 1.14 trillion over 19 months. The ECB will buy government bonds with maturities of between 2 and 20 years. Purchases will be made according to the share of each national central bank in the capital of the ECB. The plan was announced by the president of the European Central Bank Mario Draghi, in the press conference after the Governing Council. The ECB therefore inaugurates a new era in its history and follows the path taken in recent years by other major central banks: the Federal Reserve, the Bank of England and the Bank of Japan.
Quote 80% payable by individual central banks
The purchase of government bonds by the ECB provides a method for allocating risk. The central banks of the countries concerned to ensure a share of 80% of the total. So only 20% will be the risk shared between national banks and the ECB, as specified ECB President. On this Draghi has made a concession to the “hawks”, led by the head of the Bundesbank Jens Weidmann.
Based on the agreed date, then, the ECB has provided full agreement on “hypothetical risks” on purchases of securities issued by the Community institutions (such as the EIB or the ESM), which will represent the 12% of total purchases. On other purchases of securities risks will fall on the national central banks, including the ECB, however, will detect an 8%. These proportions “imply that 20 percent of purchases – said Draghi – will be subject to risk-sharing.”
The concerns about the risks national
The decision on risk sharing has been taken to mitigate the concerns of some countries, added the governor, without citing Germany, first opposition to the pooling of risks in case of restructuring or insolvency worse on bond of a country. Draghi said he was “amazed that the issue of risk sharing has become the most important thing” in the debate in the press on the eve of the decision of the ECB. “Let us ask ourselves whether it is a choice so essential to the effectiveness of the plan, we – he said – we do not.”
The “roof” of the 33 and 25%
The ECB may purchase a maximum amount that does not exceed 33% of the debt of each country. Moreover, for each issue may not purchase more than 25% of the securities market. Purchases will be made based on the portion that each central bank holds capital in the ECB.
Purchase bond Greece only plan Troika
“There is no exception for Greece, “said Draghi. There is “an exception”, which allows you to buy securities rated speculative, but only in the presence of an assistance program of the Troika. A message to Athens, which goes to the polls Sunday and whose assistance program agreed with the triad EU-ECB-IMF expires at the end of February. Without a further agreement therefore Greece will no longer be part of the program acqsuiti ECB.
Decision “a large majority”
The governor explained that the council of the ECB was “unanimous” that the Qe is a real instrument of monetary policy and the need to launch it “now” there has been a decision, “a large majority”, without the need for a vote.
A push for reforms
The governor then explained the objectives of the plan, making it clear that the ECB is important “that structural reforms are implemented by individual Member credibly and effectively to raise the expectations of income “families, as it is essential” to encourage enterprises to increase investment from the start, and so anticipate the economic recovery. ”
Drop as Euro and spread
Euro rapidly downhill after the start of the speech of the president of the ECB. The single currency is scesca under 1.15 dollars, against 1.1601 marked before the press conference in Frankfurt and then get even below 1.14 share (here the change in real time). The spread between BTPs and German Bunds to ten years, which opened this morning at around 124 points, fell to a height of 108 points. The differential has since stabilized just below the area of 120 points.
Marketplace accelerates after the announcement
Milan Stock put the turbo immediately after the announcement of the ECB president. The main FTSE MIB index gained 2.5% to 20,475 points, driven by banking stocks that accelerate upward and closed at +2.44 percent.
Interest rates confirmed
This morning the European Central Bank, after the meeting of the Steering Committee has confirmed, as expected, the rate of 0.05% Reference Eurozone 0.05%. Reflecting the marginal lending rate remains at 0.30% and the rate on the deposit facility will remain negative at -0.20%. The marginal lending rate and the rate on bank deposits are respectively 0.30% and -0.20 percent.
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