Mario Draghi has proposed a means of tackling the immediate problem in Europe but it’s up to politicians to come up with long term solutions
It is not the ‘big bazooka’ that David Cameron has been urging them to unleash, but it’s the heaviest calibre ammunition deployed so far.
The European Central Bank will hold its latest meeting amid speculation that it will take action to bring down Spain's cost of borrowing.
European Central Bank President Draghi says that they are already seeing "positive results" from the announcement of the banks bond buying plan.
Mr Draghi said that confidence in the euro has risen and that fund managers are bringing their money back within the eurozone.
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.
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:
– Graeme Leach, chief economist at the Institute of Directors
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
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%
European Central Bank chief Mario Draghi has said that the ECB will retain the same status as other debtors when it purchases the bonds.
he also highlighted why the bank had been moved to start buying bonds, saying, "bond markets are distorted in the euro area."
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."
European Central Bank chief Mario Draghi confirmed that one member of the committee dissented on the decision to buy bonds on the secondary market, but would not confirm who it was. It is known that the Germans have strongly objected to the scheme in the past.
There will be no set limits on the bond purchases announced by the European Central Bank today.