Reuters reports, citing officials from the central bank
The report states that there is an obscure clause in government bond contracts that may help the ECB to clear a key hurdle to launching a fresh stimulus programme by allowing it to own even more government debt.
For some context, one of the main issues with the ECB’s debt purchases in the past is that they didn’t have the capacity to own more considering that there is a issuer limit that prevents them from being the ‘blocking minority’ should a country apply for debt restructuring.
I reckon this will certainly be a cause of concern in practice if the ECB chooses to buy up a lot more of one country’s debt than others. Free government financing anyone? Can you imagine the number of fingers that will be pointed towards the governing council on any slight suspicion of biasness? Geez.