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ECB hints at Italian and Spanish bond purchases

The European Central Bank says it will “actively implement” its bond-buying programme to tackle the eurozone debt crisis, heightening expectations it could begin purchasing Italian and Spanish government debt.

A statement issued by the central bank last night welcomes the fiscal and structural reforms recently announced by Italy and Spain, saying the “decisive and swift” implementation of these measures will help to reduce public deficits.

In addition, the ECB applauds the pledges made by France and Germany over the weekend that the European Financial Stability Facility (EFSF) will assume responsibility for bond buying once it becomes active later in the year.

The bank also says it considers it “fundamental” that eurozone governments are ready to launch the EFSF if its analysis determines there are “exceptional financial market circumstances and risks to financial stability”.

“It is on the basis of the above assessments that the ECB will actively implement its Securities Markets Programme,” the ECB’s statement says.

“This programme has been designed to help restoring a better transmission of our monetary policy decisions – taking account of dysfunctional market segments – and therefore to ensure price stability in the euro area.”

Although the bank did not specific which countries’ bonds will start purchasing, a number of analysts have said it is highly likely Italian and Spanish government debt will be targeted.

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