The ECB is preparing a new instrument against the fragmentation of the euro zone | Photo credits: Istock
FRANKFURT, June 15 (Reuters) – The European Central Bank (ECB) promised on Wednesday to flexibly reinvest the maturities of the bond portfolio it has built since 2020 and develop a new instrument to prevent fragmentation of the euro zone by supporting the most indebted member countries.
“The pandemic has resulted in lasting weaknesses in the euro area economy which contribute to an uneven transmission of the normalization of our monetary policy depending on the jurisdiction”, explains the ECB in a press release published after of an impromptu meeting of its Governing Council devoted to the tensions that have affected the bond markets of the euro zone for several days.
“Based on this observation, the Governing Council decided that it would implement in a flexible manner the reinvestment of future maturities of the PEPP portfolio, with the aim of preserving the functioning of the monetary policy transmission mechanism” , she adds.
The Council also mandated the relevant services of the Eurosystem and the services of the ECB to speed up the development of an instrument to prevent fragmentation, the statement said. (Report Balazs Koranyi and Francesco Canepa, French version Marc Angrand)