This post was written by Philip Lane
The presentation file is here.
Update: supportive FT editorial here.
Some key points (from the ongoing press conference):
- Central Bank expected to hold the government bonds for a weighted average of 15 years – so the cheap ECB funding will not be extinguished very quickly. The gap between the interest rate it receives on the bonds and the cheap ECB funding will flow back to the government via the profits of the central bank.
- (Only if financial stability restored would the central bank sell the bonds on an accelerated schedule, beyond the minimum specified path. But if financial stability restored, sovereign bond yields would be lower, so selling the higher-interest bonds sensible.)
- There are liquidation costs in 2013, so no material difference in this year’s general fiscal balance
- In 2014-2015, the fiscal balance improves by 0.6 percent of GDP.