Euro rises on report of ECB plan to buy unlimited debt
Source: The Guardian
The euro rose on the foreign exchanges on Wednesday after the Bloomberg financial news service reported that the European Central Bank was preparing to announce plans to buy unlimited quantities of government debt from troubled members of the single currency.
Quoting central bank officials, the agency said the ECB was ready to take action to bring down the interest rates on borrowing paid by countries such as Italy and Spain. Full details of the blueprint are likely to be disclosed by Mario Draghi, the ECB president, on Thursday after a meeting of the central bank's governing council.
According to the Bloomberg, the ECB plans to "sterilise" its bond-buying by removing money from elsewhere in the eurozone economy such as by selling bonds or restricting the money supply. This could ease fears that action to help the weaker members of the 17-nation bloc will lead to an explosion in the money supply.
The ECB is likely to concentrate on buying short-term debt bonds that mature within three years in the hope that it will provide breathing space until longer-term measures are in place.
Read more: http://www.guardian.co.uk/business/2012/sep/05/euro-rises-ecb-unlimited-debt