ECB agrees new bond-buying programme

Last Updated: Thu, Sep 06, 2012 12:50 hrs

FRANKFURT (Reuters) - The European Central Bank agreed a new bond-buying programme on Thursday to lower struggling euro zone countries' borrowing costs which would serve as a "fully effective backstop", ECB President Mario Draghi said on Thursday.

The ECB Governing Council agreed on the "modalities of outright monetary transactions", Draghi told a news conference after the Council's monthly policymaking meeting in Frankfurt.

Seeking to back up his pledge to do whatever it takes to preserve the euro, Draghi said the new bond-buying programme, aimed at the secondary market, would "safeguard the monetary policy transmission in all countries in the euro zone area".

It would address bond market distortions and the "unfounded" fears of investors about the irreversibility of the euro.

The scheme, which the Bundesbank is known to have opposed, would be a "fully effective backstop to prevent potentially destructive scenarios", he said.

"We are strictly within our mandate," Draghi said. (Writing by Paul Carrel/Mike Peacock)

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