60 billion euros per month, a total of one trillion euros – as much money does the European Central Bank to take September 2016 (ECB) in hand to buy European government bonds and other credit instruments
On March 9, the ECB started with the purchases. The feedback from market participants am suggesting that the reaction proceeds smoothly so far, said ECB chief Mario Draghi on Monday (3/23/2015) before the Economic and Monetary Affairs Committee of the European Parliament in Brussels. A lack of bonds he could not determine Draghi said. “At this time, we see no evidence that there is not enough to purchase bonds for us.”
The monetary authorities want with the money flood – technically known as “quantitative easing” (QE) – fuel the bank lending and thus boost the economy. The currently very low inflation in the euro zone is to be hoisted again towards the ECB target of just below two percent. Of these, it is still far away: In February 2015 this share was down 0.3 percent
According Draghi start lower funding costs for banks already have a positive impact on the cost of borrowing for households and firms. Previously considered unprofitable – – by lower loan rates, new investment projects would be attractive. The economy in the euro area located in the meantime recovering. “The latest data and surveys show that the growth momentum wins,” Draghi said.
No ECB money for Greek banks
The ECB chief expressed his confidence that Greece will come again to enjoy QE against the parliamentarians. These, however, would have several conditions must be fulfilled, which currently is not yet the case. The same is true for a possible re-introduction of special rules for Greek bonds. So far, Greek bonds are excluded from the program.
The dependence of Greek banks bailouts of the European Central Bank has increased in the opinion of the ECB President. The banks’ liquidity situation has got worse. Nevertheless, according to Greek banks are solvent Draghi.
The National Bank of Greece, by total assets, the largest Greek financial institution, had on Monday a net loss of 1.1 billion euros in the previous fourth quarter. The bottom line for the full year 2014 was a profit of 66 million euros, compared with 809 million euros a year earlier.
“Good will on all sides” necessary
The Hellas banks are now predominantly dependent on so-called ELA loans for its money supply, which must be approved by the ECB. The risk for granting such aid and are liable for any costs borne solely by the domestic central bank in Athens.
The direct access to fresh ECB money to banks now largely blocked. Because the ECB is now accepted by low credit Hellas bonds no longer as a pledge. These special arrangements had the monetary authorities recently lifted.
A Greek exit from the euro-zone is not an issue, according to Draghi. However, he called on Athens to service its debt. “The Greek government should commit themselves to meet their debt obligations to all creditors in full,” Draghi said. Then any future government policy should be based.
Draghi also expressed cautious confidence that the current negotiations take a positive end. With good will on all sides could a credible perspective for the successful completion of the review process can be achieved.
hmf / bea (rtr / AP)