The European Central Bank is introducing a new plan to acquire financial assets in a move to stabilize markets as financial policymakers scramble to combat the destruction brought by the coronavirus on the world markets.
The ECB announced that by year-end it might purchase up to 750 billion euros ($820 billion) in government and private sector securities, including commercial paper.
The Pandemic Emergency Purchasing Plan was established less than a week after policies laid down by the central bank have done little to provide relief for traders.
The central bank said that it will acquire government debt across the The European region, including that of the heavily-affected areas like Italy and Greece, a move ECB officials were previously hesitant about.
The effort is a throwback to the 2008 financial turmoil and is hoped to ease Europe's cash-crippled governments that they will be able to loan despite the widespread pandemic scare.
After another day of mostly losses in Asia, shares opened marginally higher in Europe, with investors braced for more uncertainty. Germany's DAX rose 2.4 percent and shares in London and Paris were also higher early Thursday.
Japan's index struggled to sustain early gains, and South Korea's Kospi dropped by 7 percent. Thanks to the coronavirus crisis, concerns of a prolonged recession are causing investors to turn to cash, driving down prices for most properties.
On Wednesday, the Dow Jones Industrial Average lost more than 1,300 points, or 6.3 percent. After a 24 percent loss a day earlier, oil prices rebounded, with US crude rising nearly 14 percent.
The US Federal Reserve slashed its benchmark interest rate to near zero on Monday and announced it would buy $700 billion in treasury and mortgage bonds. It unveiled two emergency loan schemes on Tuesday, last used during the financial crisis of 2008, which aim to ease the credit flow to American businesses and households struggling in the midst of the outbreak.
PEPP will purchase securities from both the public and private sectors by the end of 2020. In a statement, the ECB stressed that the Governing Council is completely prepared to increase the size of its asset purchase programs and to change their composition for as long as necessary as possible.
In London, the move was welcomed by IG chief executive June Felix. "I think the ECB is trying to save the real economy," she disclosed to The Standard. "This just made sense, honestly. The main thing is to restore confidence to the market," she added.
