Citing two European Central Bank (ECB) sources familiar with talks, Reuters’ Francesco Canepa wrote that “an obscure clause in government bond contracts may help the European Central Bank clear a key hurdle to launching a fresh stimulus programme by allowing it to own even more government debt.”
Pointing out the fact that the ECB’s self-imposed ban on owning more than a third of each country’s debt is not allowing it to accumulate more public sector bonds, Canepa explains: “This so-called issuer limit is designed to prevent the ECB from becoming a “blocking minority” if a country applies for a debt restructuring and its bondholders have to vote on it.”
“But under possible solutions studied by staff of the euro zone’s 19 national central banks, this constraint may be circumvented by stripping central banks of their voting rights, two sources familiar with the matter said.”
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