The European Central Bank is expected to come out swinging Thursday with a bond buying program intended to knock down rates for its weaker sovereigns, but the plan may not pacify markets for long if Spain doesnâ€™t soon commit to use it.
ECB President Mario Draghi pledged this summer to do whatever it takes to keep the euro intact, including purchases of shorter duration Italian and Spanish bonds. News reports quoted sources saying the ECB would announce a plan to purchase bonds with maturities of less than three years.Â A Bloomberg report said the plan has no size limits and would not include aÂ measure to establish caps on yields, as desired by Spain.
The program would also contain a conditionality forcing countries that would benefit from it to first request assistance and agree to comply with budgeting rigor. Spain has said it would not request needed assistance until it saw the details of the conditions and what was being offered, and it is yet unclear whether it would accept this plan, as reported.