The Wall Street Journal: Bundesbank to buy €10 billion a month for ECB’s QE
The Deutsche Bundesbank will buy German sovereign bonds amounting to around €10 billion ($ 11.4 billion) monthly, as part of the European Central Bank’s quantitative-easing program starting in March, a senior official told The Wall Street Journal.
The ECB last month announced its QE program to halt a decline in inflation expectations and falling prices. The program entails securities purchases of around €60 billion a month, including mostly sovereign bonds as well as private-sector assets.
“There are many details to clarify, also regarding the purchase of bonds with negative yields,” André Bartholomae, the Bundesbank official in charge of the operative side of the transactions, said.
Shorter-end German bonds, with maturities of up to five years, carry negative yields. That means the Bundesbank is in the uncomfortable position of buying bonds with negative returns from the outset, leading to losses.
In previous ECB bond programs, the Bundesbank acquired sovereign bonds from eurozone-periphery countries, and made billions of euros in profit.
This time, ECB governing council member Jens Weidmann, long opposed to the program, said that the Bundesbank will only buy German bonds under QE, minimizing risk. Weidmann is also president of the Deutsche Bundesbank.
An expanded version of this report appears on WSJ.com