FRANKFURT (MNI) – The German Bundesbank will buy the largest share
in the European Central Bank’s government bond purchase programme, a
legal text published on the ECB’s website showed.
“Under the programme, the euro area National Central Banks,
according to their percentage shares in the key for subscription of the
ECB’s capital, and the ECB, in direct contact with counterparties, may
conduct outright interventions in the euro area public and private debt
securities markets,” the paper reads.
The capital key implies that the Bundesbank would buy around 27% of
all bonds that are purchased by the Eurosystem, followed by France with
around 20% and Italy with around 18%.
The programme — aimed at bringing down the yield spread between
Greek, Spanish and Portuguese government bonds and German Bunds — thus
exposes the Bundesbank to greater default risks than any other Eurozone
central bank.
The Bundesbank’s dominant role in the programme appears all the
more problematic as President Axel Weber did not vote in favour of the
bond buy programme and said he remains “critical” of it.
Still, the capital key rule, by apparently removing any discretion
at the national central bank level, allows Weber to circumvent potential
domestic political pressures against participation in the program
without running afoul of his ECB colleagues.
The ECB has not published an intended volume of the government bond
purchase programme and indicated that it will not do so. On Tuesday, the
ECB’s consolidated financial statement should give some indication of
how much the central bank has spent thus far.
–Frankfurt bureau; +49-69-720142; jtreeck@marketnews.com
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