European bond yields soar as ECB plans to limit bond spreads
Wall Street News
faceEURThe recent avalanche of regional government bonds and the soaring yields have made the ECB unable to sit still.
The media quoted people familiar with the matter as saying that at a meeting on Thursday, June 26, local time, European Central Bank President Christine Lagarde told the finance ministers of euro zone countries that if the borrowing cost of weaker countries rises too high or too fast, Europe will lose money. The central bank will launch new crisis-fighting tools. If bond spreads widen beyond a certain threshold, or if market volatility exceeds a certain pace, it could trigger the ECB to use new tools.
Lagarde said the new mechanism studied by ECB officials was intended to avoid unreasonable market volatility that would put pressure on euro zone countries. She did not say whether the limitations of the trigger tool would be made public.
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