After Greek Default the ECB Will Start Buying Corporate Bonds

Greece’s default was a non-event (almost) for investors. But markets won’t be as calm if the country crashes out of the euro, so central bankers are getting ready.

The European Central Bank said Thursday it is now ready for the first time to buy the bonds of a number of companies in the eurozone, in addition to government debt, as part of its trillion-euro stimulus.

“The bazooka is ready,” tweeted RBS economist Alberto Gallo.

The ECB has been pumping about 60 billion euros a month into European markets since March. It’s trying to boost eurozone inflation and growth by making it even cheaper for governments and companies to borrow money.

But the program could also play a crucial role in protecting the rest of the eurozone if Greece has to dump the euro. No country has ever left the eurozone before, and markets would be in uncharted waters.

via CNN

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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 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.
Alfonso Esparza