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ECB plans Big Bond Buys

When European Central Bank President Mario Draghi vowed all those months ago to do ‘whatever it takes’ to save the Euro speculation over whether he would initiate bond-buying was rife.

After weeks of mounting anticipation this course of action was finally confirmed and labelled the ‘Outright Monetary Transactions’ programme. Although investor confidence was bolstered by this news and the common currency enjoyed a much needed rally, details as to how the ECB will actually proceed have been rather thin on the ground.

Without such details economists had begun to query how the central bank planned to extricate itself from the scheme and halt OMT once it begins the process of purchasing the sovereign debt of floundering Eurozone members.

However, according to reputable but unnamed sources, under the heavily discussed OMT programme the European Central Bank plans to buy sovereign bonds in impressive amounts for periods off 1-2 months. This would then be followed by an assessment period in which purchases would be stopped for weeks or even months. This plan was hinted at by Draghi himself during yesterday’s news conference.

Draghi asserted ‘We would exit from OMTs once their objectives have been achieved or when there is a failure to comply with a programme. OMTs would not take place while a given programme is under review and would resume after the review period once programme compliance has been assured.

With the period for bond buying curtailed by the assessment period a source stated that the ECB ‘will go in the market heavily during the time the window is open’.

Several officials also commented that the German Bundesbank would be part of the bond-buying despite expressing opposition to the scheme.

It seems the ECB is primed and ready for action. What happens now is down to the troubled Eurozone members.


The Pound to Euro exchange rate is currently trading at 1.2439

The Pound to US Dollar exchange rate is currently trading at 1.6184

The Pound to Australian Dollar exchange rate is currently trading at 1.5790

The Euro to US Dollar exchange rate is currently trading at 1.3008

The Euro to Pound exchange rate is currently trading at 0.8036

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