ECB Could Discuss Changes to Assets Purchase Program Next Week

The European Central Bank may discuss technical changes to its asset-buying scheme next week but a decision could be deferred until December when the bank will also decide whether to extend the scheme beyond March, sources familiar with the discussion said.

Compromise proposals could include relaxing, on a temporary and partial basis, a rule forcing the ECB to buy debt in proportion to the size of each euro zone economy, the sources familiar with the discussion added.

That could potentially reduce the ECB’s purchase of German debt, risking renewed conflict with Berlin, which has already argued that the ECB is subsidizing indebted countries.

Other proposals may include buying a limited amount of bonds yielding less than the deposit rate, which the ECB currently rules out, and buying a bigger share of any individual bond issue, the sources added.

The ECB is looking for ways to ensure it can continue buying 80 billion euros worth of bonds every month even if it decides to extend the program beyond its current end-date in March. The asset purchase scheme was launched in March 2015 as part of efforts to revive growth and inflation in the euro zone.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza