Bloomberg the Company

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Follow Us

Industry Products

ECB’s Liikanen Says Bond Program to End Markets’ Attack on Euro

Don't Miss Out —
Follow us on:

Sept. 12 (Bloomberg) -- European Central Bank Governing Council member Erkki Liikanen said the bank’s bond-buying plan is intended to quell financial markets’ assault on the euro by regaining control of borrowing costs.

“The aim of the decision is safeguarding monetary policy transmission and the singleness of the monetary policy,” Liikanen, who also heads the Bank of Finland in Helsinki, said in an e-mailed statement today. “Unfounded risk premia, for example those related to the reversibility of the euro, are not acceptable.”

The ECB is preparing to buy debt with a maturity of up to three years on the secondary market to ease pressure on countries’ sovereign bond yields. ECB President Mario Draghi last week unveiled details of the unlimited program, which requires the countries to accept “strict and effective” conditionality in the form of a program administered by the European Financial Stability Facility or later the European Stability Mechanism, Liikanen said.

It is now up to governments in countries such as Spain and Italy to trigger ECB buying by requesting aid and agreeing to reforms. The Frankfurt-based central bank’s plan doesn’t “change the division of responsibilities between member states and the ECB,” Liikanen said.

ECB Executive Board member Joerg Asmussen suggested policy makers may sell bonds purchased under their new program if governments don’t stick to agreed conditions. ECB’s statutes allow the bank to be “active on financial markets by buying and selling securities,” he said yesterday when asked whether the central bank would consider dumping the bonds in case of non-compliance.

To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.