ECB May Announce Unlimited Bond-Buying

September 5, 2012 9:39 AM EDT
Reports out this morning say ECB president Mario Draghi's bond-buying proposal, an attempt to reign in the high cost of borrowing in Spain and Italy, could involve unlimited purchases of government debt. The reports say the ECB would refrain from setting a cap on yields and would mainly stick to bonds rather than a broad range of assets. There are a number of groups in Europe who are opposed to the plan, including officials at Bundesbank.

Policy makers will start deliberating on the plan later today and Draghi will announce whether it has been agreed to at a press conference tomorrow.

It is also important to note that the bonds buying could be "sterilized". In other words, the ECB will remove from the system the same amount of money it spends, ensuring the program has a neutral impact on the money supply.

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