this Transmission Protection Tool (TPI), the European Central Bank’s (ECB) anti-fragmentation mechanism, cannot be used borrowing from countries subject to extreme open protocolas stated by the monetary authority this Thursday.
According to the details of the mechanism published by the organ, the ECB Four Eligibility Mechanisms for Taking Country Debts. The Frankfurt-based authority will not be able to borrow from countries covered by either the extreme deficit protocol or the macroeconomic imbalances protocol.
Likewise, the ECB will consider it. if the country in question has financial sustainabilityto value if the course of public debt is sustainable Taking into account the analyzes of the European Commission, the European Stability Mechanism and the International Monetary Fund.
Fourth, the authority, headed by Christine Lagarde,i country’s macroeconomic policies are sound and sustainablethat is, if they follow their recovery and resilience plans and comply with the recommendations in the European Semester market.
TPE will be added toolbox’ To be enabled for ECB and erratic counter-market dynamics and threatens the transmission of monetary policy.
The volume of purchases under the TPI will depend on the severity of the risks faced by the ECB, but no ‘ex ante’ restrictions on purchases. Purchases will cease when there is a lasting improvement in the transmission of monetary policy.
The ECB underlined that the activation of TPI cannot interfere with monetary policy. Therefore, purchases will be made in a way that will not have a lasting impact on the Eurosystem’s balance sheet or the institution’s monetary position.
The Authority will purchase debt on the secondary market issued by independent entities with maturities of 1 to 10 years. If appropriate, the ECB will consider whether to purchase the acquisition as well. private sector debt (Business).