The European Central Bank (ECB) has launched a 750 billion euro emergency bond plan to allow EU member states to increase spending to counter the impact of the coronavirus.
“Extraordinary times require extraordinary action," ECB President Christine Lagarde said Wednesday after an unscheduled meeting to stem the fallout from the coronavirus outbreak, widely seen as driving the economy into recession.
"There are no limits to our commitment to the euro. We are determined to use the full potential of our tools, within our mandate,” Lagarde wrote on Twitter.
Her remarks echo the legendary words of her predecessor Mario Draghi who vowed in 2012 to do “whatever it takes” to preserve the euro at the peak of the EU's sovereign debt crisis.
The emergency plan dubbed Pandemic Emergency Purchase Programme (PEPP) will have an overall envelope of €750 billion and will allow the European Central Bank to buy government and corporate bonds.
The launch brings the ECB's planned purchases for this year to 1.1 trillion euros, its biggest annual amount ever, with the newly agreed buys alone worth 6 percent of the euro zone's GDP.
The latest action by the ECB came just six days after the group unveiled a big-bank stimulus package that failed to calm nervous markets, piling pressure on the bank to open its financial floodgates.
They flung open last week when the ECB offered a temporary envelope of asset purchases of up to €120 billion on top of its regular monthly €20 billion purchase of assets. Now with its PEPP plan of €750 billion, the bank is hoping to make investors feel more at ease.
The plan is not eternal however. It will end as soon as the bank “judges that the coronavirus COVID-19 crisis phase is over, but in any case not before the end of the year,” the ECB said in a statement.
ECB tests positive
The bank itself was hit by the virus it said last week after a member of its staff tested positive.
The bank had already announced “operational precautions” including restricting non-essential travel, postponing conferences and suspending non-essential visits.