tag:blogger.com,1999:blog-3120478448417742445.post4877401534642374382..comments2024-03-24T06:35:14.281+00:00Comments on The Portuguese Economy: My problem with austerirtyEditorhttp://www.blogger.com/profile/16779405217168307855noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-3120478448417742445.post-7376840458910190052010-03-10T23:38:29.925+00:002010-03-10T23:38:29.925+00:00The role of ECB interventions to shore up the Euro...The role of ECB interventions to shore up the European money market has not been fully highlighted by the media and analysts as one of the main causes of widening on European risk premiums. Since the beginning of crisis, the ECB has decreased the quality of credit collateral in its repo-operations and other lending operations with the banking system. Basically, the banking system has been allowed to access the ECB’s standing facilities using securities with lower ratings or, even worse, with no trading at all. In simple words, the banking system has raised its finance needs through financial operations where they pump their bad assets into ECB’s balance sheet. In the end, it has effectively created an over supply of prime rated securities in the market and mostly important for European countries there has been a kind of crowding out between “toxic” banking securities and sovereign bonds. Financial investors can transform a “frog” into a “princess” through the ECB’s standing facilities so what would be the reason of buying a “princess” if you can buy much cheaper a “frog” and.…..Wegiehttps://www.blogger.com/profile/06218747292418109239noreply@blogger.com