Mario Draghi could end the search for an asset worth buying if he’d only turn to the euro area’s jointly issued crisis bonds.
That’s the analysis of Guntram Wolff, director of the Bruegel institute in Brussels, who is a frequent contributor to closed-door meetings of euro-area finance ministers. He proposes that the European Central Bank president tap a 490-billion-euro ($669 billion) pool of debt issued by agencies that include the region’s two bailout funds.
ECB officials faced with a stumbling economy and inflation stuck at less than half their goal have floated the idea of adding stimulus via asset purchases, akin to quantitative easing, only to be confronted with a shortage of suitable instruments. The complexity presented by 18 government debt markets means Draghi is instead priming investors for more limited action such as interest-rate cuts for now.