ECB to buy sovereign debt in E.U. bailout

A large Euro symbol in front of the European Central Bank building in Frankfurt, Germany.

TEXT OF STORY

Stacey Vanek-Smith: The European Union has just agreed to a plan worth nearly a trillion dollars to stabilize European markets and currency. Christopher Werth has more.


Christopher Werth: Early this morning, European leaders announced they would set up a joint fund to backstop countries in need. The rescue plan is worth nearly $1 trillion.

Stefan Schneider: The measure is really huge. I mean obviously much bigger than expected.

Stefan Schneider is with Deutsche Bank. He says Greece was in turmoil, and a financial contagion was said to be "infecting Europe." Besides the dollar amount, the big question was whether the European Central Bank would begin buying up European government bonds. Previously, the bank had avoided such measures, but today it says it will begin buying up sovereign debt. Schneider again:

Schneider: In this respect, I mean the Eurozone has given a clear signal. So it might actually work.

But no one is quite sure just how much money will be made available. Schneider says a lot of the fear is simply over how well the European Union can respond to skyrocketing budget deficits among its member countries.

Schneider: Which country isn't? I mean look at the U.K.; the U.K. is even worse. Look at the U.S., double-digit deficits. The U.S. is in no better shape than the Eurozone.

The U.S. and the U.K. have also bought up government bonds to pump money into the economy.

In London, I'm Christopher Werth for Marketplace.

rattle the continent. The so-called nuclear option is a pledge from the European Commission, the International Monetary Fund and European governments to lend money to any country that needs it. Christopher Werth has more.


Christopher Werth: Early this morning, European leaders announced they would set up a joint fund to backstop countries in need. The rescue plan is worth nearly $1 trillion.

Stefan Schneider: The measure is really huge. I mean obviously much bigger than expected.

Stefan Schneider is with Deutsche Bank. He says Greece was in turmoil, and a financial contagion was said to be "infecting Europe." Besides the dollar amount, the big question was whether the European Central Bank would begin buying up troubled European government bonds. Previously, the bank had avoided such measures. But today it says it will begin buying up sovereign debt. Schneider, again:

Schneider: And in this respect, the Eurozone has given a clear signal. So it might actually work.

But no one is quite sure just how much money will be made available. Schneider says a lot of the fear is simply over how well the European Union can respond to skyrocketing budget deficits among its member countries.

Schneider: I mean which country isn't? Look at the U.K.; the U.K. is even worse. Look at the U.S., double-digit deficits. The U.S. is in no better shape than the Eurozone.

The U.S. and the U.K. have also bought up government bonds to pump money into the economy.

In London, I'm Christopher Werth for Marketplace.

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