Under pressure to ‘Save the euro’ the European Central Bank is gearing up to buy Italian and Spanish government bonds on the open market – but not yet.
ECB President Mario Draghi said it will only act after eurozone governments activate EU bailout funds to also buy bonds.
There will be no ECB intervention before September and countries being helped will have to accept strict conditions and supervision.
Draghi also outlined more moves that may be taken to support the euro: “The governing council will consider further non-standard monetary policy measures according to what is required to repair monetary policy transmission. In the coming weeks we will design the appropriate modalities for such policy measures”
The ECB chief admitted the German central bank chief Jens Weidmann has reservations about bond-buying and that further efforts will be needed to persuade the Bundesbank before there is a final vote to take action.
Financial markets seemed underwhelmed by the announcements, with some investors having interpreted Draghi’s recent comments as a sign of imminent rather than future and conditional action.
At that time he said that the ECB would do whatever it takes within its mandate to protect the currency bloc from collapse adding “and believe me, it will be enough”.
The ECB did not cut interest rates this month. They were kept at a record low 0.75 percent despite the Bank’s experts concluding that eurozone economic growth is weak and will recover only very gradually as uncertainty about the outlook is sapping confidence.
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