(10 September 2012 – Europe) The European Central Bank (ECB) has announced a plan for a massive sovereign debt buy-up despite German opposition to the plan.ECB chief Mario Draghi said governments also had to do their bit to save the euro.
His masterplan is designed to bring down the soaring borrowing costs that crisis-wracked countries say prevent them from getting back on their feet.
To do this, the ECB will buy the debt – or bonds – of struggling governments, helping to keep their borrowing costs at manageable levels while giving them the funds they need to operate.
Draghi convinced investors the scheme could work, as stock markets across Europe jumped and Spanish and Italian borrowing costs tumbled on the news.
In one of the most highly anticipated meetings in ECB history, the bank left its key interest rates at their current all-time lows, as most had expected.
Its main interest rate was left unchanged at 0.75 percent and the ECB also downgraded its growth forecasts for the 17-nation bloc.