Business Irish

Sunday 8 December 2019

ECB bought Irish bonds, traders say

The European Central Bank bought Irish bonds today, according to three traders and strategists with knowledge of the transactions.

The ECB purchased debt maturing between 2011 and 2020, one of the traders said, under condition of anonymity because the deals are confidential.

A central bank spokesman declined to comment when contacted by telephone in Frankfurt.

ECB council member Axel Weber, who is also president of Germany’s Bundesbank, said on October 12 that the ECB’s "securities purchases should now be phased out permanently."

ECB President Jean-Claude Trichet countered that an "overwhelming majority" of policy makers supported maintaining the bond-buying program, with Austria’s Ewald Nowotny also rejecting the demand.

The ECB’s bond purchases differ from so-called quantitative easing policies pursued by the Federal Reserve and Bank of England because the central bank mops up the liquidity created by the purchases, meaning the net effect on the money supply is neutral.

The move is aimed primarily at reducing volatility in the market. No bonds were purchased in the two weeks ended October 22, the ECB said on October 25.

The ECB began the program on May 10 to stabilise markets rocked by the region’s sovereign-debt crisis.

The purchases were part of a European Union-led push to rescue the euro, which fell to a four-year low on June 7 after Greece’s near default raised concern that some nations in the region would struggle to finance their budget deficits.


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