ECB to buy unlimited volume of bonds

The European Central Bank unveiled Thursday the details of a new programme to purchase an unlimited amount of the sovereign bonds of eurozone countries, but strictly within the bank's policy mandate. ECB chief Mario Draghi told a news conference the bank would launch a scheme of "Outright Monetary Transactions or OMTs in secondary markets for sovereign bonds in the euro area." The programme, which would replace a previous much-contested one called SMP, would cover sovereign bonds with maturities of up to three years and would have strict conditions attached to it, Draghi told a news conference here. The bank has set no limit to the volume of bonds it will purchase under the new programme, he added. "As we said a month ago, we need to be in the position to safeguard the monetary policy transmission mechanism in all countries of the euro area." The OMTs "will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro," Draghi said. The central bank chief insisted that in launching the new programme, the ECB was acting "strictly within our mandate to maintain price stability over the medium term. It was acting "independently in determining monetary policy and the euro is irreversible," he said. "We aim to preserve the singleness of our monetary policy and to ensure the proper transmission of our policy stance to the real economy throughout the area," Draghi explained.