ECB to buy bonds of troubled member countries

ECB to buy bonds of troubled member countriesThe European Central Bank (ECB) has indicated that it will directly get involved in the bonds market and purchase bonds of troubled member countries, most likely Spain and Italy.

Investor sentiments worldwide was moderately boosted by the European Central Bank's decision on Thursday to launch a new scheme to buy as many bonds as are required to stabilize the countries that are facing a difficult economic situation. The purchase of bonds by the region's central bank is aimed at reducing the cost of borrowing for some countries.

European Central Bank President Mario Draghi, who recently sparked a global stock rise, is working with several national governments in the region as well as outside to take steps to reduce the high cost of borrowings in Spain and Italy. Draghi had recently caused a global stock rally when he said that the ECB would do whatever it takes to save the Eurozone. He said that the ECB would ready to do "whatever it takes to preserve the euro".

The ECB is likely to buy bonds that still have between one to three years, indicating that it will acquire mixture of short term bonds and long-term ones about to need refinancing. The bank has already purchased 230 billion euro worth of long term bonds of Spanish and Italian.

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