Draghi gets ECB backing for unlimited bond-buying
By Eva Kuehnen
FRANKFURT (Reuters) - The European Central Bank agreed on Thursday to launch a new and potentially unlimited bond-buying program to lower struggling euro zone countries' borrowing costs and draw a line under the debt crisis.
Seeking to back up his July pledge to do whatever it takes to preserve the euro, ECB President Mario Draghi said the new plan, aimed at the secondary market, would address bond market distortions and "unfounded" fears of investors about the survival of the euro.
The scheme, to which Germany's Bundesbank reiterated its opposition, would focus on bonds maturing within three years and was strictly within the ECB's mandate, Draghi said. Only one member of the ECB Governing Council had dissented, he said.
"Under appropriate conditions, we will have a fully effective backstop to prevent potentially destructive scenarios," Draghi told a news conference after the central bank's monthly meeting On Thursday.
"No ex-ante quantitative limits are set on the size of outright monetary transactions," he said, using the formal term for ECB bond-buying programs.
Investors were on tenterhooks, waiting to hear how decisively the ECB would act to help bring down the borrowing costs of Spain and Italy, after disagreements among policymakers on the plan were played out in public last week.
Draghi's statement at least met expectations, analysts said. With the bond-buying plan the focus of Thursday's meeting, the ECB kept interest rates on hold, leaving its main rate unchanged at 0.75 percent.
"The details ... released today add to the credibility of the safety net taking shape in the euro zone and should support demand for euro zone assets," said Andrew Cox, G10 strategist at CitiFX in New York. Continued...