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Title: ECB weighs whether to put number on bond-fighting scheme, sources say


Jun 29, 2022 01:51AM ET


By: AnalysisWatch


European Central Bank policymakers are considering whether to advertise the scope and duration of their forthcoming bond-buying program aimed at limiting the cost of backing Italy and other obliged countries, sources told Reuters.


The ECB will advertise the new installation on July 21 alongside its first interest rate hike in more than a decade in response to a sharp rise in bond yields that has hit the most heavily obliged countries hardest.

ECB officers are preparing colorful options, including how important details to expose about it, such as horsepower and duration, according to interviews with a half-dozen policymakers at the ECB's periodic forum in Sintra, Portugal.


The sources said that among the pros of publicizing a large-scale package would be reassuring investors of the ECB's commitment to fighting what it calls fiscal fragmentation in the Eurozone.


It would also cover the ECB in the unlikely event that it's indicted in court for backing governments, as it would show that its intervention is tentative and doesn't amount to a blank cheque for countries, they added.


Still, this option could fail if bond dealers think the number is too small, the sources said. However, this threat would be avoided, but too numerous questions could be left unanswered if the July advertisement remains vague.


Policymakers agree that it's necessary to assess when and in which requests to intermediate, not to set quantitative targets.


They also agreed that the programme should be accompanied by conditions, similar to adherence to European Commission recommendations, but they shouldn't be as onerous as Reuters reported before this month.


The ECB has been sued in Germany's highest court and the European Court of Justice by German academics over its former bond-buying programme, criminating it of backing governments, which European covenants prohibit.


The courts said the ECB acted within its accreditation as long as safeguards were in place.

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