ECB VP Vitor Constancio on the wires
Institutional investors importance in the bond market means we won't see a very abrupt correction
ECB has always exerted a stabilising role in preserving favourable financing conditions
Will continue to fulfil that role if other shocks emerge
- We have to be attentive and able to respond
- Italian referendum consequences difficult to anticipate
- Yields of Italian bonds have risen and there's been contagion to Spain and Portugal
- It's not possible to prepare for that in terms of policy
- Is sure financial institutions are hedging and changing their portfolios before the event
- This is the sort of uncertainty that will trigger, or not, a shock
- Depending on degree of shock we will see if we have anything to do or not
If the referendum does cause problems we could see the ECB ramping up purchases to stave off any volatile moves in bonds. As it is they will be loading up more bonds ahead of the Christmas holiday period anyway.
