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Data published by the European Central Bank on Monday showed that the bank did not intervene to buy bonds of eurozone nations last week, despite recent renewed tensions in sovereign debt markets. The ECB first launched its bond-buying blitz under the Securities Market Programme (SMP) in 2010 to help debt-wracked eurozone countries that were finding it difficult to drum up financing in capital markets.
But for the twelfth consecutive week, the ECB's purchase volumes were zero, indicating the central bank has not felt the need to intervene since pumping more than one trillion euros ($1.25 trillion) into the banking system via three-year funding operations in December and February. The SMP has been virtually dormant since February though the programme still exists and some analysts expect the central bank to soon swoop back into secondary bond markets to help countries like Spain and Italy.
Yields on Italian and Spanish government bonds have risen rapidly in recent weeks amid concerns over the economic impact of drastic austerity programmes and a fragile eurozone banking sector. ECB President Mario Draghi will preside the bank's next policy meeting on June 7, but analysts were sceptical whether he would indicate a decision to reboot the programme. SMP was controversial from the start, with critics saying the ECB was overstepping its mandate in buying up sovereign bonds on the secondary market.

Copyright Agence France-Presse, 2012

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