BBC News – Economy – Euro crisis: new bond policy boosts indices

Mario Draghi says that this new strategy will strengthen the euro.

The president of the European Central Bank (ECB), Mario Draghi, has presented a new strategy for buying government bonds to overcome the economic crisis in the euro zone.

Through this strategy, it will be easier for countries like Spain and Italy to pay off the debt and raise funds.

Mario Draghi says that by buying government bonds, the euro will strengthen and member countries will be able to get out of the current economic crisis. The ECB says this will benefit those countries where the debt burden is increasing.

index jump

Following this decision by the ECB, there has been a huge leap in the stock markets of Europe and America. The US index held at its highest level in four years. With the announcement of the decision, there was a large drop in the cost of borrowing for the Spanish government.

While Italy’s Prime Minister Mario Monti has welcomed this ECB decision, on the other hand, according to Germany, which opposes the decision, this decision will be a step towards giving more money to negligent governments.

Although Mario Draghi says that he will control volatility through ‘Direct Currency Transactions’ i.e. OMT to remove fear and apprehensions spreading in the economic market.

transparency in spending

Emphasizing the strategic aspects of this decision, Mario Draghi also said that in order to overcome the spreading crisis in the Eurozone, it is necessary for governments to fulfill their austerity promises.

BBC correspondent Chris Morris According to him, this ECB decision is different and important in many ways from previous decisions to buy bonds. The last time bonds from countries like Spain, Greece and Portugal were purchased, no terms and conditions were attached to their purchase.

At the same time, to raise funds through OMT, interested countries will have to follow strict rules and will have to maintain full transparency regarding all information related to their spending.

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