The European Central Bank has launched a review of its pandemic bond-buying program to consider how long it should continue and whether its exceptional flexibility should be extended to older programs, the Financial Times reported, citing two Governing Council members that it didn’t identify.
The review is expected to be discussed by policy makers next month, according to the FT. The ECB declined to comment to the newspaper.
The Pandemic Emergency Purchase Program was created in March -- initially at 750 billion euros ($888 billion) and since expanded to 1.35 trillion euros -- to calm markets and support the economy as coronavirus lockdowns hit.
It was exempted from the ECB’s self-imposed rules that constrained the older asset-purchase program, which is still running. That allowed the PEPP to skew buying toward especially-stressed economies such as Italy.
It has always been described as temporary though, linked directly to the current crisis. A move to extend its flexibility more widely would likely raise concerns among some policy makers, such as Bundesbank President Jens Weidmann. He’s long warned about the risk of monetary financing of governments -- which is banned under European Union law.
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