New measures of monetary policy the ECB

The European Central Bank lowered the refinancing rate by 25 basis points to 1.0%. In doing so, the ECB and the Bank of England announced their intention to buy bonds worth over 150 billion dollars, so long as neither he nor the other Central Bank had not yet confident that the economy is on the road to recovery. Chairman of the Central Bank Trichet made it clear that, if necessary, the rate can be reduced further. He also noted that the actions of the Central Bank aimed at mitigating the economic downturn in the region this year by 4%. Trichet noted that there was little sign of stabilization and added that he does not expect to start the recovery process earlier next year. As expected, the ECB increased the term of the refinancing of its operations from six to 12 months. Unlike Britain and the United States, the euro area economy is more dependent on bank loans than on credit markets. Therefore, the ECB focuses on the provision of liquidity in the banking sector. He did not follow the example of his colleagues and did not buy the state. bonds. Instead, the European Central Bank announced its intention to buy a secured bond. But still not resolved some of the technical aspects of the process. According to Trichet, the Central Bank buys securities worth about 60 billion euros. Secured bonds are popular in Europe, but, unlike securities, the secured assets, they remain on the balance sheet of the issuer. Typically, they are used as a tool for the wholesale consolidation of debt.