The European Central Bank's plan to stabilize the euro by buying the bonds of financially stressed members of the euro zone faces several potential problems, the most important of which is that its purchases will subordinate the loans of other parties, according to an article on CNBC.

While the ECB has said that its purchases will not be senior to those of private buyers, CNBC argues that the central bank will have far more bargaining power than other purchasers. The advantage it holds could scare private buyers away from the debt of a country the ECB is supporting via its bond purchases.

The article also questions whether countries will be willing to admit they need the ECB support, and whether the ECB and nations in financial distress will be able to agree on austerity terms.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including and

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.