FRANKFURT – The European Central Bank should model its upcoming bond-buying scheme, aimed at capping borrowing costs for Italy and other indebted countries, on the one it announced during the debt crisis, ECB policymaker Joachim Nagel said on Monday.
“Design should be based on the experience of the OMT (Outright Monetary Transactions) programme,” Nagel said at an event, adding the tool shouldn’t “give the impression of discouraging fiscal policy consolidation”.
Unveiled in September 2012, OMT allow the ECB to buy unlimited amounts of bonds from countries that apply for a bailout from the euro zone’s European Stability Mechanism. This precondition is now widely seen as too politically unpalatable.
OMT was never used but its mere announcement quashed speculation on a break-up of the euro zone.
(Reporting by Francesco Canepa; Editing by Sandra Maler)
