The chapter Recovery Fund it promises to be difficult and not easy and short to solve because of the crossed vetoes of Hungary, Holland and Poland. To the rescue, the ECB could buy government bonds until mid-2022.
La Stampa reports the indiscretions gathered by Bloomberg that the next meeting of the Governing Council of the ECB, scheduled for December 10, could extend the stimuli, in addition to the 500 billion increase in the plan last March.
The concern is fueled by the situation in some EU countries, including Italy after the Fitch agency confirmed the rating a bbb- of our country, keeping the outlook unchanged.
A merciless judgment that predicts a sharp contraction of 9% for Italian GDP in 1, and then rebounds in 2020 and 2021 when it will grow by 2022% and 4% respectively. Such a slight recovery that the Pandemic emergency purchase program (Pepp) will have to be back in the running with new funds, at least until 2022.
In yesterday's pre-meeting, the governors of the national central banks urged (Italy and Spain in the front row) to increase the Pepp funds by extending their temporal scope. The program counts on 1.350 billion euros, with which to buy sovereign bonds, asset-backed securities (Abs), commercial paper, corporate bonds and covered bonds. But they will become 1.850, as estimated by Goldman Sachs, Ubs and Allianz.
The PEPP
The program was presented to the world by the European Central Bank during an extraordinary meeting convened on 18 March last. On that occasion, the ECB appointed the PEPP for the first time.
It is nothing more than a simple program to purchase both public and private sector securities, with a total value of 1350 billion euros.
The PEPP will go on until the end of the year and will include all assets already deemed eligible under the APP.
The program was conceived to have a limited duration in time. As confirmed by the ECB during the presentation of the program, the PEPP should have ended a end of the year or at least until the most critical phase of the COVID-19 emergency was behind us. A duration that today, in fact, we want to extend.
The goal of ECB President Christine Lagarde is to curb the economic meltdown of the Eurozone, overwhelmed like the rest of the globe by the pandemic. With the new securities purchase program, the European Central Bank has tried to guarantee once again the transmission of its monetary policy to all components of the financial system and to every single member of the euro area.