4 Feb 2014
Flash: ECB to sterilise Crisis-era bond purchases? - Danske Bank
FXStreet (Barcelona) - Anders Vestergård Fischer, Analyst at Danske Bank notes that European Central Bank President Mario Draghi would only consider ending the sterilisation of crisis-era bond purchases if he’s openly backed by the Bundesbank, according to Bloomberg citing two euro-area central bank officials familiar with the debate.
Key Quotes
“Enlisting the Bundesbank to convince the German public of a change in the terms of the SMP may be Draghi’s defense strategy against the kind of backlash his predecessor Jean-Claude Trichet experienced when he announced the programme in 2010.”
“Then-Bundesbank President Axel Weber criticized the measure on the same day, saying it posed ‘significant risks’. Ending the weekly liquidity drain would more than double excess liquidity in the EUR system and that would lower money market interest rates and curb the volatility seen recently.”
Key Quotes
“Enlisting the Bundesbank to convince the German public of a change in the terms of the SMP may be Draghi’s defense strategy against the kind of backlash his predecessor Jean-Claude Trichet experienced when he announced the programme in 2010.”
“Then-Bundesbank President Axel Weber criticized the measure on the same day, saying it posed ‘significant risks’. Ending the weekly liquidity drain would more than double excess liquidity in the EUR system and that would lower money market interest rates and curb the volatility seen recently.”