Tuesday 16 July 2019

European Central Bank ready to buy ABS assets on the markets next week

A European Union flag flies outside the headquarters of the European Central Bank (ECB) in Frankfurt, Germany. Photographer: Ralph Orlowski/Bloomberg
A European Union flag flies outside the headquarters of the European Central Bank (ECB) in Frankfurt, Germany. Photographer: Ralph Orlowski/Bloomberg
Independent.ie Newsdesk

Independent.ie Newsdesk

European Central Bank (ECB) executive board member Yves Mersch said policy makers will be ready to buy asset-backed securities (ABS) next week as part of a stimulus plan.

ABS assets typically include bundles of loans secured in commercial real estate and other types of property.

The ECB's package of measures includes "a purchase program, which we started with covered bonds a few weeks ago and which we will continue in one week" with asset-backed securities, Mersch said late yesterday in a speech in Herrenberg, Germany.

"They will help "to guarantee price stability in the euro area," he said.

Since June, policy makers have cut interest rates twice, offered long-term loans to banks and committed to buy assets to boost the ECB's balance sheet by as much as €1 trillion.

With inflation in the Eurozone stuck at well below the ECB's goal and the economy struggling to expand, President Mario Draghi has pledged to add stimulus if needed, stoking speculation about large-scale sovereign-bond purchases.

"There hasn't been a decision to buy government bonds," Mr Mersch said. "It is a theoretical option if the situation deteriorates."

Policy makers are gathering in Frankfurt on November 19 for their mid-month meeting.

They used the October meeting to sign off on the legal acts that officially established the covered-bond programme and laid out how it will be implemented.

Mr Draghi said last week that ABS purchases would start "soon." (Bloomberg)

Irish Independent

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