The European Central Bank should model its upcoming bond-buying plan, aimed at curbing borrowing costs for Italy and other heavily indebted countries, on what it announced during the debt crisis, the ECB member said on Monday. , Joachim Nagel.
“The design should be based on the experience of the OMT (Outright Monetary Transactions) program,” Nagel said, adding that the tool in question should not “give the impression that it discourages the consolidation of fiscal policy,” as reported by Reuters .
The OMT, introduced in September 2012, allows the ECB to buy an unlimited number of bonds from countries applying for a bailout from the eurozone’s European Stability Mechanism. However, this condition is now widely regarded as politically unpalatable.
The OMT was never used, but its announcement alone quelled speculation of an eventual breakup of the eurozone.
Source: Capital
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