ECB Makes QE Bonds Available for Lending to Ease Liquidity Woes

The European Central Bank began a bond-lending program to help unclog markets snarled up by its own debt-purchase plans introduced last month to boost growth and stave off deflation.

The move is important because it reduces the risk for traders that the region’s bond market becomes dysfunctional after the cost of borrowing securities in the repurchase market climbed due to a shortage of collateral, threatening to reduce liquidity. Bonds purchased under the ECB’s quantitative-easing program will be made available for lending from Thursday, the Frankfurt-based central bank said on its website.