Forex Flash: ECB approach makes it less likely Spain ask for full bailout - JPMorgan

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FXstreet.com (Barcelona) - According to David Mackie, Chief European Economist, JPMorgan, "the new approach by the ECB means that the size of the ESM, and whether or not the ECB is able to finance it, are a lot less relevant than they were. Essentially, instead of trying to build a bigger fiscally based liquidity hospital, the region has built an outpatients department with the intention that patients who go there for treatment will never need to be checked into the main hospital's emergency room."

David adds: "All that Spain and Italy have to do to benefit from unlimited central bank purchases out to three years is sign up to a precautionary ESM program. This would involve significantly less resources than a full blown program, and unlimited ECB purchases at the short end, and some ESM purchases further out along the curve, would likely ensure that the beneficiary sovereign maintained good capital market access. The new approach by the ECB makes it much less likely that Spain and Italy will ever need to ask for a full bailout."



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Forex and Currencies

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