Draghi Leak: “Monetary Outright Transactions”

Whatever it means, whatever it takes… the new thing by the ECB to do whatever it takes to preserve euro may be called “Monetary Outright Transactions”, to be announced tomorrow after the ECB meeting. There will be no explicit yield caps, and all purchases will be sterilised.

Via Bloomberg (emphasis ours):

European Central Bank President Mario Draghi’s bond-buying proposal involves unlimited purchases of government debt that will be sterilized to assuage concerns about printing money, two central bank officials briefed on the plan said.

Under the blueprint, which may be called “Monetary Outright Transactions,” the ECB would refrain from setting a public cap on yields, according to the people, and a third official, who spoke on condition of anonymity. The plan will only focus on government bonds rather than a broader range of assets and will target short-dated maturities of up to about three years, two of the people said.

…

The officials said policy makers are likely to adopt the proposal, with Germany’s Bundesbank remaining the sole objector.

…

While the ECB doesn’t expect to have to spend large sums of money on bonds, Draghi’s plan calls for no limits to be set, two of the officials said. The ECB also won’t have seniority on any bonds it buys, they said.

…

Draghi will stress conditionality of the program tomorrow

For more news and analysis, visit Also sprach Analyst. Follow us on Twitter and Facebook.

Get our daily email update FOR FREE!

About Zarathustra

Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.