ECB will deal with all arising problems - Commerzbank

Dr Christoph Balz, Research Analyst at Commerzbank, notes that the ECB Governing Council member Visco has given his assurance that the central bank will deal with all arising problems when implementing its bond buying programme.

Key Quotes

“Up to now, there have been no signs of a shortage of government bonds. If problems were encountered, solutions would be found. When asked whether the departure from distributing asset purchases across member states according to the capital key could be an option, he said: “It depends. We will have to see“.

According to ECB Governing Council member Nowotny the ECB is likely to set the future course of its bond buying programme in the last quarter: “In Q4 2016 the decision will have to be made as to which signals are given to the markets on the future path of the bond buying programme”. The USA had shown that such a programme cannot be ended abruptly.

In the meantime, the ECB has published data on bank lending in June where a noticeable revival is still lacking. Loans to private households in the euro zone exceeded last year’s level by only 1.9% (May: 2.1%), while loans to businesses outside the financial sector increased by 1.2% (May: 1.2%).”