Monday, August 20, 2012

Eurozone Bank Quashes Intervention Rumours

Markets slipped after the European Central Bank (ECB) distanced itself from reports that it was preparing to step in and help troubled eurozone members.

There was speculation that the ECB was planning to intervene if a country's borrowing costs got too high.

A German magazine reported that the Bank was considering setting interest rate thresholds for bond purchases - meaning it would buy debt issued by vulnerable countries if their interest rates exceeded a premium over Germany's Bunds.

But an ECB spokesman later said it was misleading to report on views which have not yet been discussed by the ECB's Governing Council - prompting Spanish bond yields to gradually come off the day's lows.

There was also limited reaction on the markets to a statement by Germany's Bundesbank reiterating opposition to the ECB buying the bonds of countries like Spain and Italy. Read More