The European Central Bank entered the covered bond market for the first time on Monday since its new boss announced an asset purchase programme.
The ECB bought paper from French and Spanish banks as Governer Mario Draghi embarked on a programme of economic stimulation he has said he is ready to blow a trillion euros on.
The 250-year-old covered bond market has traditionally helped fund Europe’s mortgage industry, but it declined for the first time in at least a decade last year. Ninety percent of the global market is in Europe.
The ECB is worried at the prospect of deflation on a Japanese scale, and already-wary consumers spending even less.
Covered bonds are the latest unconventional tool being adopted by the ECB in its bid to shake Europe out of its economic torpor.