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The
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Auerback The ECB can buy debt in the secondary matekrs, so functionally that’s not a problem. It just means that they pay a commission to Goldman, Morgan Stanley, or some other lucky investment bank. They did as much with the SMP. And if the ECB were serious about ensuring the eurozone’s solvency, they would continue to do this in a much more robust fashion. With two major flaws:1) The ECB considers the SMP portfolio temporary and not permanent like the Fed's SOMA. The latter will actually make sure that it retains its portfolio size through non-competitive bids at treasury auctions (when the securities held in the account mature). In the case of the ECB something like that would be considered monetary financing by the Bundesbank and other Northern Europe central banks.2) The Fed remits any profits directly to the US Treasury. In the case of SMP holdings, the ECB will remit profits to European countries treasuries which can decide to use them to finance a country bailout (like in the case of Greece as part of the PSI). The ECB should be remiting profits directly to the issuer country (of the security producing the profit) as far as the SMP is concerned.
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(VISITOR) AUTHOR'S NAME
Oumjuthakan
MESSAGE TIMESTAMP
20 december 2014, 04:01:29
AUTHOR'S IP LOGGED
114.40.17.135
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