Daily: The ECB’s sovereign debt monetisation

The big theme in today’s links is the ECB yet again. With the interview with Joerg Asmussen out, backing Mario Draghi’s previous statements, it is now more clear than ever where this is headed in Europe. The lead story here from Ambrose Evans-Pritchard gets at the broad strokes and dovetails well with what I wrote earlier today. The key concept is “convertibility” or “redenomination” risk. The ECB will use this rationale to buy sovereign debt in concert with the European bailout funds in potentially unlimited quantities. That’s where this is now headed irrespective of what the Bundesbank thinks, especially because Angela Merkel agrees that this is the right course. I would call this monetisation because the ECB will not just expand its balance sheet but also do so in an unsterilized manne...


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