The European Central Bank (ECB) from the middle of October 2014 will begin to redeem the mortgage obligation in the fourth quarter – asset-backed securities (ABS). This was announced by ECB President Mario Draghi during a press conference after a meeting of the Central Bank. According to him, the program will last at least two years.
“Together with a series of programs target long-term loans (TLTRO) banks, which will be held until 2016, these purchases will have a notable impact on our balance sheet,” – said M.Dragi.
ECB president reiterated that the amount of assets on the balance will return to 2012 levels as a result of the implementation of new programs. Thus, it could be an increase of about 1 trillion euros – current level is 2.04 trillion euros, the peak was reached in June 2012, at around 3.1 trillion euros.
The rules governing the purchase of assets, will be similar to the rules of collateral the ECB purchased will be “simple and transparent paper.” “The ECB will not buy structured ABS”, – said M.Dragi. But at the same time the central bank will try to include in the program as much as possible types of ABS.
ABS will also be included in countries with ratings below “BBB-“, that is, the last investment grade, albeit with reservations. “The risks of assets in Greece and Cyprus are equivalent risks in other places,” – says the head of the ECB. To meet requirements for ABS-selling country should participate in EU programs.
According to him, the growth momentum in the euro area weakened, inflation expectations are suppressed. Weakening of economic growth could have a negative impact on investment. In addition, according to the head of the ECB, requires serious consideration failure of structural reforms in the region.
ECB leaders are willing to unanimously support additional measures, if necessary, said Mr. Draghi.
The ECB will monitor geopolitical risks, the dynamics of exchange rates and the impact of measures taken on the economy. However, he still expects a moderate recovery in 2015, as the measures of the Central Bank and the reform of individual countries in the region will support domestic demand and the recovery of the world economy have a positive impact on exports.
Currently, the Central Bank policy aimed at maintaining price stability in the medium term, stressed M.Dragi. ECB does not target a euro exchange rate, the fall of the single currency due to differences in business cycles in different regions of the world, he said.