ECB to buy sovereign bonds for two months as part of OMT

October 5, 2012 Share Print 2

The European Central Bank envisions buying large volumes of sovereign bonds for a period of one to two months once its “OMT” program is launched, but would then suspend purchases during anassessment period, senior central bank sources told Reuters.

Until now, the details of how the ECB plans to conduct the bond-buying program unveiled last month by President Mario Draghi have been murky.

Economists have questioned what the bank’s exit strategy might be, or in other words how it would put a stop to “Outright Monetary Transactions” once it had begun to buy the sovereign debt of struggling euro zone countries.

The answer appears to be that the ECB would suspend its purchases on a regular basis for a period that could last up to a month or more.

via CNBC

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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 has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. 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.