ECB President Christine Lagarde, speaking at a conference in Portugal a few days ago, had outlined this initiative for the bonds of the European South.
The yields on European Southern bondsas from tomorrow the new flexible way of reinvesting from European Central Bank (ECB) of the bonds it holds in its portfolio.
According to a report by Reuters ΕΚΤ will be able to invest in bonds of Italy, Portugal, Spain and Greece from tomorrow, with funds coming from German, French and Danish bonds that expire. In essence, that is the ECB will buy bonds of the weak countries of the Southusing funds from the strongest and most financially sound states.
It is recalled that the President of the ECB Christine Lagarde Speaking at a conference in Portugal in recent days, he had foreshadowed the initiative, saying “we have decided to implement the flexible way of reinvesting expiring bonds in the pandemic portfolio (PEPP) starting on 1 July.
The ECB’s Governing Body also recently decided at an extraordinary meeting to set up a new tool for the ECB to intervene in the bond market after the end of its quantitative easing programs, and to proceed flexibly to reinvest the bonds they mature.
The ECB’s aim is to avoid an asymmetric increase in borrowing costs between eurozone countries, or as it has been called, “fragmentation in the eurozone bond market”.
Pending the implementation from tomorrow of this new flexible bond reinvestment framework, Greek 10-year bond yield fell to 3.6%resulting in a margin of 2.23% against the corresponding German title.
Respectively, the yield of the Italian 10-year decreased to 3.37%, that of the Portuguese to 2.43% and that of the Spanish to 2.44%.
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