From Reuters' online blog..
So the ECB is actually doing a round about QE by providing unlimited 3 year loans to banks-. Then those banks can use that money to buy sovereign debt.
The ECB's decision to provide unlimited 3-year liquidity to banks should give them the funds they need to finance economic growth and purchase sovereign debt, helping to lower euro zone bond yields, ECB Governing Council member Christian Noyer said.
In an interview with French news channel LCI, Noyer also said that a EU summit deal on Friday to move toward greater fiscal union in Europe should help to underpin a recovery in confidence.
"What we decided yesterday in the governing council of the ECB was to use our bazooka ... so that banks can continue to do their job, continue to provide credit to the economy and ... buy sovereign debt," Noyer said.
"That is the role of insurance companies, banks and financial investors. We will give them all the liquidity they need so they can do this."
Noyer said Friday's "historic" agreement by European countries to set automatic sanctions on budget rule breaks -- agreed by all 27 EU members except Britain -- should help stabilize investor sentiment toward the euro zone.
"I am convinced that this should be well received and that should allow interest rates to fall," he said.
So the ECB is actually doing a round about QE by providing unlimited 3 year loans to banks-. Then those banks can use that money to buy sovereign debt.
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