ECB, Bundesbank Talk Bond Buys

ECB President Draghi and Bundesbank’s Weidmann said to discuss new policy measures, including bond purchases.

European Central Bank President Mario Draghi will hold talks with Bundesbank President Jens Weidmann in the coming days in an effort to overcome the biggest stumbling block to a new raft of measures including bond purchases, two central bank officials said.

Having secured the backing of governments in Spain, France and Germany, Draghi is now seeking to win over ECB policy makers for a multi-pronged approach to reduce bond yields in countries such as Spain and Italy, the officials said on condition of anonymity because the talks are private.

Increased Credibility

“German support increases the credibility of an ECB intervention immensely, as otherwise markets would have to fear a subsequent down-scaling of the policy action,” said Christian Schulz, senior economist at Berenberg Bank in London. “If the ECB is credible enough, bond yields would stabilize without the ECB buying many bonds at all.”

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