FRANKFURT (MNI) – European Central Bank President Mario Draghi said
Thursday that countries that activate the OMT bond-buying program cannot
count on achieving any specific result in terms of borrowing costs.
“The conditions under which the OMT will operate are very straight
and clear,” Draghi told a press conference here after the central bank’s
monthly council meeting. “They don’t talk about negotiations or about a
certain interest rate,” he said.
Draghi’s comments came after recent news reports that Spain was
seeking guarantees from the ECB that its bond buying would be sufficient
to bring yields down to a certain level.
Draghi said that it was “quite natural” for different countries in
the Eurozone to have different credit costs and that the OMT was only
meant to counter fears of a euro-area breakup that drove spreads to
levels that were unacceptable.
“We said the main aim of the OMT was to remove tail risk and to
overcome monetary fragmentation that stems from redenomination risks and
that we would do it in a size that would be adequate to reach its
objective,” Draghi said.
He said that the mere announcement of the OMT plan had already
produced a “very significant improvement in financing conditions,” with
some spreads narrowing by more than 200 basis points.
–Paris newsroom, +33142715540; jduffy@marketnews.com
[TOPICS: M$$CR$,M$X$$$,M$$EC$,MGX$$$,MT$$$$]
