, Columnist
Mario Draghi Really Needs a Barbell
Solving the redemptions dilemma by going short now, then long later.
This gives me an idea.
Photographer: Dick Whittington Studio/Corbis via Getty Images
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The answer to one of Mario Draghi’s problems lies in a dusty corner of a basement gym.
Though the European Central Bank is ending new net bond purchases through quantitative easing, its stimulus packages are still very much under discussion. One issue concerns the maturities it will target when it reinvests its substantial slug of maturing debt and coupon payments — should these go short, or long? This choice poses a dilemma, and resolving it may be a matter of crushing it with a barbell.