2 agosto 2012 20:04
Draghi statements in London, last week, have created huge expectations on today's ECB decisions. But today, even the certainties are conditional. The spreads that the ECB wanted to fight, and had narrowed in the last week, widened with the disappointment of what Draghi said in the ECB press conference. Spain's yields reached an intraday high of 7.2% and Italy's 6.3%.
2 agosto 2012 20:04
depends on the "necessary but not sufficient" condition that states do request support from the bailout funds EFSF/ESM, which imply strict conditionality.
| Mario Draghi, President of the ECB: |
| "The Governing Council extensively discussed the policy options to address the severe malfunctioning in the price formation process in the bond markets of euro area countries. Exceptionally high risk premia are observed in government bond prices in several countries (...). In order to create the fundamental conditions for such risk premia to disappear, policy-makers in the euro area need to push ahead with fiscal consolidation, structural reform and European institution-building with great determination. (...) governments must stand ready to activate the EFSF/ESM in the bond market when exceptional financial market circumstances and risks to financial stability exist - with strict and effective conditionality (...). The adherence of governments to their commitments and the fulfilment by the EFSF/ESM of their role are necessary conditions. The Governing Council, within its mandate to maintain price stability over the medium term and in observance of its independence in determining monetary policy, may undertake outright open market operations of a size adequate to reach its objective." |
| source: ECB |