Executive Intelligence Review

FROM EIR DAILY ALERT


European Central Bank Cut Italian Bond Purchases During Crisis in Rome

June 5, 2018 (EIRNS)—Apparently, the ECB helped the markets to speculate against Italy at the end of May, to sabotage the formation of the new government. The original Financial Times report is backed by a chart showing a plunge in ECB purchases of Italian bonds in May. This means that it was the missing support by the ECB that determined a collapse in bond prices, which was then used as part of the tactics to block the Conte government.

The ECB’s official explanation is that this was “purely linked to practical issues such as the need for the bank to reinvest in German bonds after a chunk of its holdings matured,” the Financial Times reports. Lega economic spokesman Claudio Borghi replied,

“Since [ECB President Mario] Draghi promised to do ‘whatever it takes,’ the biggest player in the Italian bonds market has been the ECB—and they fix the price. It is not general markets that have the greatest influence on the price; the ECB is by far the biggest factor.”

Also,

“The central bank has the ability to space out the asset purchases needed to cover the redemptions over different months if they feel its buying will have an outsize influence on the market,”

MarketWatch comments.

“The ECB has always shown flexibility in applying capital keys on a monthly basis and May was no exception,” said Chiara Cremonesi, fixed income strategist for UniCredit. “The ECB’s QE and its application intend to be as neutral as possible and are not linked to any country-specific issue.”

M5S Deputy Laura Castelli told the Huffington Post Italia that “quantitative easing is being weakened at exactly the moment when we need it strengthened to secure the stability of the EU.”

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