Wednesday

29th Sep 2021

ECB to continue bond purchases till spring 2011

  • ECB chief Jean-Claude Trichet (Photo: Swedish Presidency)

The European Central Bank (ECB) has moved to ease market jitters over eurozone sovereign debt by announcing that the authority will continue to supply liquidity to troubled banks into the spring of next year.

There had been concerns, as indicated by public pronouncements from ECB board members, that now was the time for banks to ween themselves off the central bank's liquidity teat.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Many banks had feared that the ECB would slowly begin to phase out its liquidity scheme, officially called its Securities Market Programme.

However, ECB chief Jean-Claude Trichet told reporters in Frankfurt on Thursday (3 December) that the body had decided to continue the practice until March, 2011.

The SMP "is ongoing. I repeat: ongoing," he said at a press conference.

Mr Trichet did not announce any plans to increase the amount of eurozone government debt purchased however, in order to calm the so-called bond vigilantes, who have been steadily exacting higher interest rates and increasing the borrowing costs of countries such as Ireland, Portugal, Spain, Italy and Belgium in the past three weeks.

A number of analysts had suggested that the bank might announce a shock-and-awe-type move of €1 trillion to €2 trillion in debt purchases.

Initially disappointed that the rumour turned out to be untrue, markets nevertheless quickly bounced upwards on the news of an extension of the liquidity provision.

The yield on 10-year Spanish bonds dropped from 5.16 percent to 5.14, while that on Irish bonds fell from 8.9 percent to 8.6.

The single currency meanwhile moved up from $1.3059 to $1.3217.

Up to now, the ECB has purchased €67 billion in government bonds.

Luxembourg tax scandal may prompt EU action

An investigation into Luxembourg's tax regime has uncovered how the Italian mafia, the Russian underworld, and billionaires attempt to stash away their wealth. The European Commission has put itself on standby amid suggestions changes to EU law may be needed.

Investigation

Portugal vs Germany clash on EU corporate tax avoidance

Portugal's taking over the EU presidency puts the tax transparency law for corporations - which has been fought over for years - to a vote in the Council of Ministers. The resistance of the German government has failed.

News in Brief

  1. Navalny to get EU human-rights prize
  2. Nato patrols Kosovo-Serbia border as tensions soar
  3. EU lorry drivers will not help UK
  4. Dutch PM gets extra security on bike commute to work
  5. Berliners vote to expropriate corporate landlord apartments
  6. Polish minister calls for border state-of-emergency extension
  7. More Polish regions bin anti-gay declarations
  8. Russia bypasses Ukraine to ship EU gas via Turkey

Vietnam jails journalist critical of EU trade deal

A journalist who had demanded the EU postpone its trade deal with Vietnam until human rights improved has been sentenced to 15 years in jail. The EU Commission says it first needs to conduct a detailed analysis before responding.

Stakeholders' Highlights

  1. Nordic Council of MinistersNATO Secretary General guest at the Session of the Nordic Council
  2. Nordic Council of MinistersCan you love whoever you want in care homes?
  3. Nordic Council of MinistersNineteen demands by Nordic young people to save biodiversity
  4. Nordic Council of MinistersSustainable public procurement is an effective way to achieve global goals
  5. Nordic Council of MinistersNordic Council enters into formal relations with European Parliament
  6. Nordic Council of MinistersWomen more active in violent extremist circles than first assumed

Latest News

  1. Panama to stay on EU tax-haven blacklist
  2. Moldova to EU: Help us go after fugitives
  3. Election means three-party German government likely
  4. Lagarde urges EU to use market power to fix gas price
  5. MEPs 'disappointed' at observer-status at new EU health body
  6. An economist on 'elephant-in-room' at German election
  7. Afghan withdrawal may spark ex-forces terrorism in Europe
  8. Book Club: The Last Bluff

Join EUobserver

Support quality EU news

Join us