ECB’s crisis-fighting scheme risks being tied up in legal and political knots

 Tough questions on when and how to intervene

The ECB is expected to commit to buying the bonds of countries whose borrowing costs it believes are rising because of market speculation to levels beyond those warranted by economic fundamentals.

Unlike its previous schemes, which bought bonds of all countries in relation to their size, the new plan would target only the countries that most need support.

The ECB is likely to ask the European Commission to police any conditions linked to the new instrument

ECB’s Outright Monetary Transactions has never been used and the ESM’s involvement is seen as politically toxic in southern EU countries — especially Italy.

FT 6 July 2022

https://www.ft.com/content/9a6499a5-42e9-45be-a400-92ba4d3c384f


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