ECB unveils bonds crisis scheme
European Central Bank President Mario Draghi has unveiled a much-awaited programme to buy the government bonds of eurozone countries to help bring down their borrowing rates.
Mr Draghi told a Frankfurt press conference after the bank’s policy meeting, that the programme, called Outright Monetary Transactions, will have no set limit and be a “fully effective backstop”.
Countries that want the ECB to buy their bonds must first officially ask for help from Europe’s bailout funds and agree to “strict and effective” budget policy conditions.
The International Monetary Fund will help monitor the compliance by governments to those conditions.
Mr Draghi said the bank will make its bond-buying programme open to scrutiny.
He said the size of the bond purchases would be published weekly. A breakdown by country will take place monthly.
The ECB will have the same status as other creditors for the bonds it buys. That means that if a country defaults on those bonds, it would take losses as well. The decision is meant to not scare investors away from the bonds the ECB buys.
Mr Draghi said the ECB can stop the purchases if a country does not comply with policy conditions.
