This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/business-19499950
The article has changed 13 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| Mario Draghi set to unveil ECB bond-buying euro plan | Mario Draghi set to unveil ECB bond-buying euro plan |
| (35 minutes later) | |
| Mario Draghi, president of the European Central Bank, is expected to unveil details of a new bond-buying plan later, aimed at easing the eurozone's debt crisis. | Mario Draghi, president of the European Central Bank, is expected to unveil details of a new bond-buying plan later, aimed at easing the eurozone's debt crisis. |
| In July, Mr Draghi had said that he would do "whatever it takes" to save the euro. | In July, Mr Draghi had said that he would do "whatever it takes" to save the euro. |
| The ECB is expected to help cut the borrowing costs of debt-burdened eurozone members by buying their bonds. | The ECB is expected to help cut the borrowing costs of debt-burdened eurozone members by buying their bonds. |
| However, Germany's Bundesbank is vigorously opposed to the idea. | However, Germany's Bundesbank is vigorously opposed to the idea. |
| Jens Weidmann, the Bundesbank president, is concerned member states could become hooked on central bank aid and fail to reform their economies sufficiently. | Jens Weidmann, the Bundesbank president, is concerned member states could become hooked on central bank aid and fail to reform their economies sufficiently. |
| But the majority of the 23 ECB council members are expected to support the plan. | But the majority of the 23 ECB council members are expected to support the plan. |
| And the Organization for Economic Co-operation and Development (OECD) added its support for the ECB bond-buying plan on Thursday, as it warned that the eurozone crisis posed the greatest risk to the global economy. | And the Organization for Economic Co-operation and Development (OECD) added its support for the ECB bond-buying plan on Thursday, as it warned that the eurozone crisis posed the greatest risk to the global economy. |
| It is calling for more action from central banks to prevent a break-up of the eurozone. | It is calling for more action from central banks to prevent a break-up of the eurozone. |
| "Concerns about the possibility of exit from the euro area are pushing up [government bond] yields, which in turn reinforces break-up fears," the OECD said in its global economic outlook. | "Concerns about the possibility of exit from the euro area are pushing up [government bond] yields, which in turn reinforces break-up fears," the OECD said in its global economic outlook. |
| "It is crucial to stem these exit fears. This could be achieved by the ECB undertaking bond market intervention to keep spreads within ranges justified by fundamentals." | "It is crucial to stem these exit fears. This could be achieved by the ECB undertaking bond market intervention to keep spreads within ranges justified by fundamentals." |
| The bond markets are hoping for Mr Draghi to put flesh on the bones of an idea that has been widely trailed in the run-up to the latest meeting. | The bond markets are hoping for Mr Draghi to put flesh on the bones of an idea that has been widely trailed in the run-up to the latest meeting. |
| Several questions remain unanswered. | Several questions remain unanswered. |
| For example, will the ECB put a cap on the amount it is prepared to spend or will the bond-buying be unlimited? Will ECB intervention be conditional on a eurozone member first formally requesting financial aid from existing bailout funds? And what type of bonds will the ECB buy? | For example, will the ECB put a cap on the amount it is prepared to spend or will the bond-buying be unlimited? Will ECB intervention be conditional on a eurozone member first formally requesting financial aid from existing bailout funds? And what type of bonds will the ECB buy? |
| If such questions are not answered, the markets could be disappointed, some analysts are warning. | If such questions are not answered, the markets could be disappointed, some analysts are warning. |
| "Our expectation is that we get some more information but not all the parameters today, so if the market is looking for even more than the leaks suggested already, then the potential for disappointment is definitely there," said Norbert Aul, rate strategist at RBC Capital Markets. | "Our expectation is that we get some more information but not all the parameters today, so if the market is looking for even more than the leaks suggested already, then the potential for disappointment is definitely there," said Norbert Aul, rate strategist at RBC Capital Markets. |
| Mr Draghi is hoping that ECB intervention in the bond markets will help reduce the borrowing costs of debt-laden countries such as Spain and Italy and lessen the likelihood of them needing to ask for a full sovereign bailout, an eventuality that could bankrupt the eurozone and cause the collapse of the euro. | Mr Draghi is hoping that ECB intervention in the bond markets will help reduce the borrowing costs of debt-laden countries such as Spain and Italy and lessen the likelihood of them needing to ask for a full sovereign bailout, an eventuality that could bankrupt the eurozone and cause the collapse of the euro. |
| Spain, which has already asked for 100bn euros (£79bn) in state aid to help its debt-stricken banks, is currently paying yields of 6.42% on its 10-year bonds, while Italy's 10-year bond yields are 5.51%, below the critical 7% figure thought likely to trigger a sovereign bailout request. | Spain, which has already asked for 100bn euros (£79bn) in state aid to help its debt-stricken banks, is currently paying yields of 6.42% on its 10-year bonds, while Italy's 10-year bond yields are 5.51%, below the critical 7% figure thought likely to trigger a sovereign bailout request. |
|