News / Europe

European Central Bank to Buy Troubled Governments' Bonds

Mario Draghi, the president of the European Central Bank, Frankfurt, Germany, August 2, 2012. Mario Draghi, the president of the European Central Bank, Frankfurt, Germany, August 2, 2012.
x
Mario Draghi, the president of the European Central Bank, Frankfurt, Germany, August 2, 2012.
Mario Draghi, the president of the European Central Bank, Frankfurt, Germany, August 2, 2012.
Caroline Arbour
The European Central Bank has agreed to buy government bonds from debt-ridden Eurozone countries that request help, as part of an effort to relieve pressure from soaring borrowing costs. The much-awaited announcement in Frankfurt Thursday may benefit cash-strapped Italy and Spain, if they agree to the conditions. 

European Central Bank President Mario Draghi raised expectations of investors and the governments of Spain and Italy, when he spoke these words in July:

“The ECB is ready to do whatever it takes to preserve the euro," he said. "And believe me.  It will be enough.”

In recent months, the crisis-ridden countries of Europe have had to borrow at costs judged unsustainable, with Spanish 10-year bond interest rates hitting a record 7 percent in July.

So all eyes were on the European Central Bank Thursday to see what it would do to bring interest rates down to more acceptable levels and relieve pressure on cash-strapped governments.

The ECB president said the central bank will buy government bonds, with no set limit.

“We expect that the three-year longer-term refinancing operations will provide further support for the further stabilization in financial markets and in particular for lending activity in the euro area,” he said.

If Madrid or Rome want the bank to buy their bonds, they will have to request a bailout - and there will be strings attached and strict budgetary conditions imposed.

The International Monetary Fund will police the new loans.

Draghi said the six members of the ECB’s Executive Board and the governors of the 17 European area national central banks were all in favour of the plan, except for one: Germany.

The Bundesbank (German central bank) said that its chief, Jens Weidmann, "considers these acquisitions as effectively financing governments by printing money.”

The euro dropped in value, but European stocks were buoyed by the European Central Bank’s announcement. Madrid's main (IBEX-35) index closed up almost 5 percentage points.

German Chancellor Angela Merkel was visiting with Spanish Prime Minister Mariano Rajoy in Madrid Thursday.

Angela Merkel only said that the European Central Bank had acted within its mandate.

Mariano Rajoy said he wouldn’t comment on whether Spain would seek a bailout, since he hadn’t yet been able to study the details of the plan.

Earlier this week, the prime minister said he didn’t see the need for new conditions.

Rajoy said again Thursday Spain is committed to the euro and his government will continue doing what it can to keep its deficit in check, while trying to stimulate growth and create employment.

More than 38,000 Spaniards lost their jobs and began claiming benefits in August, the first increase in unemployment in five months.

You May Like

Cambodia Seeks Official UN Maps for Vietnam Border

Notice of request comes as 2 countries open border talks Tuesday after a clash last month More

From South Africa to Vietnam, Cyclists Deliver Message Against Rhino Horns

Appalled by poaching they saw firsthand, sisters embark on tour to raise awareness in countries where rhino horn products are in demand More

Uber Wants Johannesburg Police Protection

Request follows recent protests outside ride-hailing service's Johannesburg office More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
New Implant Could Help Restore Movement to Paralyzed Limbsi
|| 0:00:00
...    
🔇
X
Maia Pujara
July 07, 2015 10:01 PM
A half-million people suffer spinal cord injuries each year because of car accidents, serious falls and diseases, according to the World Health Organization. Researchers are now working on a soft but strong spinal cord implant that could one day restore movement in paralyzed individuals. VOA’s Maia Pujara reports.
Video

Video New Implant Could Help Restore Movement to Paralyzed Limbs

A half-million people suffer spinal cord injuries each year because of car accidents, serious falls and diseases, according to the World Health Organization. Researchers are now working on a soft but strong spinal cord implant that could one day restore movement in paralyzed individuals. VOA’s Maia Pujara reports.
Video

Video Getting it Done Beyond a Nuclear Deal

If a nuclear deal is reached between Iran and world powers in Vienna, it will be a highly technical road map to be used to monitor nuclear activity in Iran for years to come to ensure Tehran does not make nuclear weapons. Equally as complicated will be dismantling international sanctions that were originally intended to be ironclad. VOA’s Heather Murdock talks to experts about the key challenges any deal will present.
Video

Video Rice Farmers Frustrated As Drought Grips Thailand

A severe drought in Thailand is limiting the growing season of the country’s important rice crop. Farmers are blaming the government for not doing more to protect a key export. Steve Sandford reports from Chiang Mai, Thailand.
Video

Video Making Music, Fleeing Bombs: New Film on Sudan’s Internal Refugees

In 2012, Sudanese filmmaker Hajooj Kuka went to make a documentary among civil war refugees in Sudan’s Blue Nile and Nuba Mountains region. What he found surprised him: music was helping to save people from bombing raids by their own government. VOA’s Carolyn Weaver has more.
Video

Video 'From This Day Forward' Reveals Difficult Journey of Transgender Parent

In her documentary, "From This Day Forward", filmmaker Sharon Shattuck reveals the personal journey of her transgender father, as he told his family that he always felt he was a woman inside and decided to live as one. VOA’s Penelope Poulou has more.
Video

Video Floodwaters Threaten Iconic American Home

The Farnsworth House in the Midwest State of Illinois is one of the most iconic homes in America. Thousands of tourists visit the site every year. Its location near a river inspired the design of the house, but, as VOA’s Kane Farabaugh reports, that very location is now threatening the existence of this National Historic Landmark.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.

VOA Blogs