Euro crisis: ECB to buy bonds

The European Central Bank has announced plans to calm the euro crisis by buying struggling government bonds in return for "strict and effective" conditions.

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ECB's strategy is 'encouraging', says French minister

France's European Affairs Minister Bernard Cazeneuve has praised the European Central Bank for agreeing to launch a new bond-buying programme, saying the decision proved its commitment to support the euro currency.

"The ECB's decisions are encouraging and show a coherent line with the European summit at the end of June.

"This shows a will to maintain the euro zone's integrity, to support the euro." he said.

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ECB's decision is a 'game changer' says chief economist

The chief economist of the Institute of Directors has described the ECB's decision to enter secondary bond markets as a "game changer."

Graeme Leach said:

The ECB's decision to enter secondary bond markets could be the game changer the IoD has long argued for.

But there's a hitch. ECB action is conditional and depends on countries such as Spain signing up for even more austerity.

The key question is whether more austerity is politically possible with 25 per cent headline and 50 per cent youth unemployment

– Graeme Leach, chief economist at the Institute of Directors

Markets rally after ECB bonds announcement

World markets rallied after the eurozone's central bank pledge funds to lower debt-ridden countries' borrowing costs.

  • FTSE 100 Index rose more than 1% or 66 points at 5723.7
  • Dow Jones Industrial Average in the US was ahead 1.1%

European markets were more bullish:

  • Germany's Dax and France's Cac-40 up nearly 2%
  • France's Cac-40 up nearly 2%

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ECB giving 'effective backstop to the eurozone'

ECB chief Mario Draghi has said that the bank will publish weekly and monthly information on the bond purchases.

He also said that the announcement will give, "an effective backstop to remove risk from the euro area, but the ECB will retain it's independence throughout."

He added that; "we have given a framework to government, defined in broad lines, but it is up to the governments themselves to decide the precise shape."

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