ECB set to decide on money printing plan

Wed Jan 21, 2015 12:46pm EST
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By John O'Donnell and Paul Carrel

FRANKFURT (Reuters) - The European Central Bank's Executive Board has proposed a program that would enable the ECB to buy 50 billion euros ($58 billion) in bonds per month starting in March, a euro zone source said on Wednesday.

With the likely start date imminent and only one other opportunity at the beginning of March for governors to agree details, pressure will be high on them to finalize talks and announce the mechanics on Thursday.

These details will describe how far the ECB goes in meeting demands from Germany's Bundesbank for the risk of the scheme to rest with national central banks in countries from Greece to Italy, rather than with the ECB. ECB President Mario Draghi will speak to the media at 1330 GMT on Thursday.

The duration of the program is highly significant but also contested because Germany is troubled by the concept of bond-buying, particularly any government bond purchases, and wants to limit its scale.

Reuters could not confirm reports from other media about the length of the proposed program. The Wall Street Journal said it would last at least one year. News agency Bloomberg said the purchases would run to the end of 2016.

The ECB declined to comment on any of the reports.

The Executive Board's proposals will be subject to debate at Thursday's meeting of the 25-strong, policy-making Governing Council, and could be subject to change.

A program starting in March and running for a year would amount to a total volume of some 600 billion euros, based on a purchase rate of 50 billion euros per month. If a similar plan ran until the end of 2016, it would surpass 1 trillion euros.   Continued...

Water droplets from melting ice are seen on the entrance sign of the new European Central Bank (ECB) headquarters in Frankfurt January 21, 2015.  REUTERS/Kai Pfaffenbach