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ECB launches €750bn bond-buying stimulus to help economy through Covid-19

The European Central Bank has also decided to expand the range of assets eligible for purchase to non-financial commercial paper

The European Central Bank (ECB) has announced plans to buy an additional €750bn ($820 bn) in bonds to help the region’s economy through the worsening coronavirus pandemic.

The central bank said all the extra asset purchases would be carried out this year and cover both sovereign bonds and corporate debt. This would last until the coronavirus crisis is deemed to be over.

“Extraordinary times require extraordinary action,” ECB president Christine Lagarde said on Twitter after the measures were announced.

“There are no limits to our commitment to the euro. We are determined to use the full potential of our tools, within our mandate.”

The ECB has also decided to expand the range of assets eligible for purchase to non-financial commercial paper and to ease its collateral standards so banks can raise money against more of their assets, including corporate finance claims.

The governing council of the ECB said it will do “everything necessary within its mandate”.

The move failed to calm investors with S&P 500 futures falling more than 2 per cent in Asian trading.

After a mixed start, the pan-European Stoxx 600 advanced 1.1 per cent in early trade, with autos adding 2.4 per cent to lead gains while travel and leisure stocks continued to suffer from cancellations and shutdowns, declining 2.3 per cent.

At the bottom of the European blue chip index, British aerospace manufacturer Meggitt saw its shares fall 13 per cent. Homebuilder Hammerson and Virgin Money UK both fell by more than 12 per cent.

The ECB’s bond-buying programme has already collected €2.6tn of assets.

FURTHER READING: Low rates may hamper ECB says Christine Lagarde

FURTHER READING: ECB’s Lagarde calls for euro zone governments to use fiscal measures

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