Ireland will be among the first countries to benefit after the European Central Bank (ECB) unveiled its latest "big bazooka" aimed at ending the debt crisis.
ECB president Mario Draghi yesterday announced new plans aimed at helping euro area countries avoid financial crisis by buying unlimited amounts of their debt on the markets.
Ireland will benefit because the programme will only apply to bonds of countries in bailout programmes -- including cases like Ireland where a country is in a full bailout and is trying to return to the markets.
"This is a game-changer, it's the hoped-for unlimited 'backstop'," bond analyst Donal O'Mahoney of Davy stockbrokers said last night.
He said the measures were targeted at coaxing the private sector back into the markets.
Mr Draghi said the measures would address bond market "distortions" and what he called "unfounded" fears that the euro could break-up.
It will be a "fully effective backstop to prevent potentially destructive scenarios", he said.
Borrowing costs for Ireland, Spain, Portugal and Italy all fell follwing the announcement, while stock markets rose.
By acting as "buyer of last resort", the ECB hopes to keep a check on how much countries are charged to borrow and ultimately prevent more states being forced out of the markets.
Mr Draghi said the measures would be more effective than previous bond purchase schemes because they will only be used to help countries that have accepted aid from the euro area bailout funds.
This will include Spain, even if it avoids a formal bailout but accepts some degree of help as long as the aid comes with conditions on how the country manages its finances.
Mr Draghi said ECB help would end if governments failed to comply with their conditions.
The new measures have the backing of 16 out of 17 heads of euro area central banks, including Ireland's Patrick Honohan.
Only the head of Germany's Bundesbank Jens Weidmann opposed the measures, prompting speculation that he may leave the post he took up earlier this year following a role as adviser to Chancellor Angela Merkel.
Dubbed 'outright monetary transactions', there is no limit on the scale of the new bond buying programme. It will replace a previous bond purchasing programme that was shelved last year.
In a move aimed at reassuring the markets, the ECB said it would share the same risks as any other investor when it buys the bonds.
That did not happen when Greece effectively defaulted on its debts that were held by the private sector but not debt owed to the ECB.
The ECB Governing Council agreed on the "modalities of outright monetary transactions", he told a news conference after the ECB's regular monthly meeting in Frankfurt.
The bond measures had been heavily leaked in advanced. Earlier, the ECB left interest rates across the 17-member currency union unchanged.