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This article was published on 2 October 2014 at 13:49.
The last change is the 2 October 2014 at 16:57.
The ECB’s program of buying securities (Abs) have a duration of at least two years and will be launched in mid-October with the first covered bond transactions. He said the European Central Bank President Mario Draghi at the end of the monthly meeting of the Governing Council. The Eurotower also buy securities rated speculative (junk) in Greece and Cyprus, but only while they remain in an EU-ECB-IMF program.
The wait for the meeting of the ECB, which for the first time in its history took place in Naples, was in fact entirely centered on the details of the plan for the purchase of Abs, titles that “bundle” loans to enterprises and households and that are traded on the market, thereby freeing up banks’ balance sheets. Draghi said that the Abs will be purchased “during the fourth quarter,” therefore presumably after the first purchases of covered bonds. The objective of the ECB is to revive this market, which collapsed during and after the financial crisis, to give banks new credit instruments. The ECB has set itself the aim of bringing its budget to historic highs of $ 3 trillion of euro touched at the beginning of 2012 its budget currently has assets amounting to $ 2 trillion, so the Eurotower want to put into circulation new liquidity for about one million.
ECB ready for new measures against low inflation
Draghi reiterated that the Council is ready “unanimously” to enact new measures to raise inflation. The markets for some time betting on the purchase of government bonds, a real quantitative easing by the Fed on the model. Inflation averaged just 0.3% in September, it was further away from the objective the ECB’s official: below but close to 2 percent. And surveys have reported slowdowns in economic activity.
Respect the Stability Pact, accelerating reforms in the workplace
The ECB president also spoke on the issue of the deficit, after France announced a postponement of the targets agreed with Brussels. The countries of the euro, he warned, “should not undermine progress already achieved, but proceed in line with the rules of the Stability and Growth Pact.” The ECB is doing its part but need a decisive contribution by governments and structural reforms in labor and product markets must “clearly accelerating.”
rates unchanged at 0.05%
Nothing new on the front instead of interest rates, the ECB has left unchanged at a record low of 0.05 percent . After the cut made a surprise last month, the Governing Council of the ECB has decided to maintain the status quo in line with expectations. Armored in the frame of the Museum of Capodimonte – with a massive security apparatus keeps away the noisy protests – the directory met in a phase in which monetary policy remains under pressure due to economic developments.
“I understand the reasons for the protest but the crisis is not the fault of the ECB”
Draghi has also responded to a reporter who asked him for a comment on the events of this morning in Naples. “We understand the reasons behind this protest, sincerely understand the reasons of those who find themselves having to do with the weak state of the economy of this country – said Draghi – But what I believe to be corrected is this image that the ECB would be guilty of everything. ” “We must go back to where we were 2 ½ years ago. The financial system was on the verge of collapse “and it was the intervention of the ECB to avoid the worst, Draghi hinted. “We have cut rates so much that we can not reduce them, we injected liquidity into the system to unprecedented levels. We were able to avoid a crisis of systemic proportions. “
The full document (in English) on the floor of purchases of covered bonds and Abs
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