FRANKFURT (MNI) – Rapid activation of the European Central Bank’s
new OMT bond-buying program would be helpful to counter remaining doubts
about its effectiveness, ECB Governing Council member Ewald Nowotny said
in an interview released Monday.
Markets still “doubt that there is an effective mechanism,” Nowotny
told the German business daily Handelsblatt. “This is why I think it
would be sensible to demonstrate that we have a power station that we
can use in case of emergency.” An activation of market intervention
would thus be “sensible.”
The ECB had hinted at unlimited intervention in bond markets more
than three months ago. The announcement has pushed down Spanish 10-year
government bond yields from a peak of more than 7.5% in late July to
around 5.76%. Lower interest rates have also helped Spain to put off
requesting a bailout from Eurozone authorities.
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