Deutsche Bank offers the ECB an idea for resolving the European debt crisis by giving incentives to commercial lenders – incentives to get them buying bonds of debt-laden countries. After the politicians’ handling of the crisis hasn’t been optimal, hopes still lay at the door of the central bank, which now focuses on buying bonds of the next domino, Portugal.
Here’s a quote from Bloomberg;
In his proposed “Plan B,” London-based Deutsche Bank economist Gilles Moec said the ECB would limit collateral for one-year central bank loans to investment-grade sovereign paper rated less than AAA, encouraging purchases of debt sold by Spain, Italy, Portugal and Ireland. He also suggested a “margin-call holiday,” freeing banks from providing more collateral if the value of the swapped bonds falls.
In currency trading forex, EUR/USD lost some ground and is back to the previous range – 1.32 to 1.3267, after rising higher in Asian trading. See more lines and an outlook in the Euro dollar forecast.