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BULLION

Thursday 22 December 2011

ECB Stealth QE Euro 489 Billion Money Printing to Prevent Eurozone Banking System Collapse

The ECB's stealth QE objective was first to prevent the insolvent euro-zone banks from collapsing over the next few weeks as they were unable to refinance their short-term maturing debts as well as a run on the banks in progress in the euro-zone, and secondly (directly related) to encourage the banks to buy sovereign debt of bankrupting euro-zone countries because the ECB is not allowed to buy sovereign debts. Today's actions of giving cheap money to the banks (1% per year interest rate) achieves both objectives as the banks took the money to use it to cover short-term maturing debt as well as buy a load of PIIGS debt, and thus are buying time (a couple of months at best) and so greatly diminishes the risks for what was looking like a near imminent collapse of the euro-zone (regardless of whether the trigger was a bankrupt Sovereign or large bank as both )....more

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