The European Central Bank (ECB) is countering the economic consequences of the coronavirus pandemic with new, comprehensive bond purchases. The emergency program had a volume of 750 billion euros and should run until the end of 2020, the euro central bank said late Wednesday evening in Frankfurt. This would respond to the serious risk of monetary policy transfer and the economic outlook for the euro zone.
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“Extraordinary times require extraordinary action,” ECB chief Christine Lagarde wrote on Twitter. “As part of our mandate, we are determined to exploit the full potential of our tools.”
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The Governing Council had previously held an extraordinary conference. He also decided to soften existing criteria as to which papers can be bought by the central bank. The ECB is ready to expand the framework of the program if necessary, as well as the criteria of the eligible securities, “as much as necessary and as long as necessary,” it said.
The ECB is determined to shape the financial framework so that all areas of the economy can cope with the effects of the coronavirus epidemic. “This applies equally to families, companies, banks and governments.” As part of the new purchase program, the ECB can also buy Greek government debt, the central bank said.
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Europe’s monetary authorities had already adopted a series of measures to support the economy last week: the ECB will invest an additional EUR 120 billion in bond purchases by the end of this year. With the help of particularly cheap long-term loans, the currency keepers want to persuade banks to provide small and medium-sized companies in particular with money. In addition, the world’s leading central banks ensured the supply of the financial system with the world’s reserve currency, the US dollar. So far, however, the measures on the stock markets have largely been wasted.
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