The European Central Bank is considering a new measure against the risk of market fragmentation in response to the spread of spreads in the Eurozone region, with the bank announcing at the same time that it will apply flexibility in reinvesting the amounts due from the bonds of the pandemic.
The ECB said in a statement that its Governing Council met today to exchange views on the current market situation.
At the same time, he points out that “since the gradual normalization process began in December 2021, the Governing Council has pledged to act against the resurgent risks of fragmentation. The pandemic has left permanent vulnerabilities in the euro area economy, which contribute to the unequal transmission of monetary policy normalization “.
Based on this assessment, the Governing Council decided to apply flexibility in reinvesting funds from the PEPP (emergency pandemic) portfolio in order to maintain the functioning of the monetary policy transmission mechanism, which is a prerequisite. to enable the ECB to meet its mission of price stability.
In addition, the Governing Council decided to instruct the relevant Eurosystem Committees, together with the ECB’s services, to expedite the completion of the design of a new anti-fragmentation instrument for evaluation by the Governing Council.
The central bank has repeatedly stressed in the past that it will not allow fragmentation in the eurozone – when some countries face significantly higher borrowing costs than others in the eurozone – to impede the smooth transmission of its monetary policy.
The central bank reiterated at its last monetary policy meeting last week that “reinvestments under the PEPP can be adjusted flexibly at any time, asset categories and countries” in the event of new market fragmentation. associated with the pandemic.
On Tuesday, the member of the Board of the ECB Isabel Schnabel, also noted that the central bank is “closely” monitoring the situation and is ready to launch existing or new tools.
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
