Seriously!! Draghi utters a few words - all of which we have seen and heard a thousand times before:
- *DRAGHI SAYS ECB WILL DO WHATEVER IT TAKES, WITHIN ITS MANDATE
- *DRAGHI SAYS EXPANDED PURCHASE PROGRAM COULD INCLUDE GOVT BONDS
and EURUSD, European stocks and bonds get uber-excited...
European bond spreads tumbled...
[5]
EURUSD sliding back under 1.25
[6]
And stocks surged...
[7]
Charts:Bloomberg
* * *
As a reminder, here is what Draghi said about this in his own words...
December 2011 - ECB Press Conference
Question: Why is it so impossible for the ECB to act like
the other central banks, like the Federal Reserve System or the Bank of
England? Why do you not act more directly to help European countries by
buying up the debt on a massive scale?
Draghi: As I said before, we have a Treaty and the Treaty states what our primary mandate is, namely to maintain price stability. Also, the Treaty prohibits monetary financing.
I am old enough to remember that, when this Treaty was written in the
early 1990s, some of the countries around that table were actually doing
what you suggest doing now, namely some of the central banks of these
countries were financing the government expenditure of their governments
through money creation, and the consequences were there for all of us
to see. That is why, in a sense, this Treaty embodies the best tradition of the Deutsche Bundesbank, whereby monetary financing has always been prohibited.
So do not hold your breath!!!
