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       #Post#: 302--------------------------------------------------
        Six Key Elements of ECB Decision
       By: Marc Chandler Date: January 22, 2015, 10:53 pm
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       There are six key elements to the ECB’s announcement:
       1. Starting in March the ECB will buy 60 bln euros a month in
       national bonds and agency bonds. The amounts will be driven by
       the “capital key” which corresponds roughly to the size of the
       economies. That means that Germany, France and Italy will be the
       largest buyers.
       2. The risk will remain largely with the national central banks,
       but the risk of agency purchases will be shared collectively.
       Agency bonds will amount to 12% of the assets being purchased.
       The ECB argues that by controlling all the design features and
       coordinating the purchases, it has “safeguarded the singleness
       of the Eurosystems’s monetary policy. “ Market participants may
       disagree.
       3. The program will run through September 2016, but ECB clearly
       keeps door open: the purchases “will in any case be conducted
       until we see a sustained adjustment in the path of inflation.”
       4. The asset purchased will be investment grade, but “some
       additional eligibility criteria will be applied in the case of
       countries under an EU/IMF adjustment program. This is subtle but
       important. As long as Greece, Cyprus and Portugal are on some
       program their bonds can be bought. This is also a subtle
       indication that the old Troika no longer exists. This is part of
       the signal from the European Court of Justice preliminary ruling
       and also the signals from the new EC.
       5. Although the ECB did not cut its official rates, it did
       remove the 10 bp premium over the main repo rate (MRO) for the
       new TLTRO facility.
       6. There is an issuer limit of 33%. This is why Draghi has
       indicated that Greek bonds could be bought after SMP redemption,
       which means after July.
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