Tpi, the new ECB anti-spread shield upsets the risk of government bonds: to have it, you will need to have accounts and reforms in order

Christine Lagarde he said it and repeated it in all ways: la ECB “Does not take a position on the political issues of the Member States”. However, it is a fact, in order to be eligible for the protection of the new anti-spread shield, the TpiItaly of after Draghi it will have to equip itself with rulers who put the country on a par with the mythical homework, that is, respect for budget rules.

The criteria for access to the shield provide for it, which in the summary of the governor of theEurotower there are essentially four: compliance with EU tax rules (therefore no procedures for extra deficit); nothing macroeconomic imbalances structural; debt sustainability and adoption of solid economic policies aligned with the criteria of the Pnrr and the EU recommendations.

Nothing, in short, that is reflected in most of the socio-economic proposals of the political forces in the field. It is no coincidence that when Lagarde unveiled them, the interest paid by ten-year Italian government bonds began to gallop towards 3.6%, ominously exceeding the Greece. And so the differential with the interest required a German Bund of equal duration, the feared spreadhas come to surpass the 241 points (230 points closing with BTP yields at 3.52% against 3.53% for the Greeks).

Moreover, the conditions requested by Frankfurt were predictable, so much so that they were echoed in the indications formulated by Mario Draghi in the Senate on Wednesday morning. And the equation is quickly done. Formally, in any case, Lagarde, pressed by journalists for a specific comment on the Italian case, did not unbutton herself, but she reiterated that the ICTY is the result of unanimous decision of the board of the ECB and that all member states may be admitted, the board will determine the ownership based on the four criteria and very specific indicators.

“It is a program that has been designed to be implemented in all countries”, said the governor, stressing the absence of ex ante limits on investments and articulating the words “management discretion” and “very comprehensive evaluation”. The European Central Bank, Lagarde pointed out several times, “determines at its discretion and it is not affected. The differences in funding can certainly change if a country meets the eligibility criteria ”.

In other words, the ECB will decide that a country needs the ICT, with a range of purchases of the country’s debt securities that “will depend on the severity of the risks for the transmission of monetary policy, without ex-ante limits”. Without prejudice to the need to comply with the 4 criteria, the decision to activate the shield will be based on an overall assessment of the market indicators and monetary policy transmission and a judgment on proportionality between the activation of TPI purchases and the achievement of the primary objective of the ECB. In particular, the purchases will be focused on public sector securities with a residual maturity between one and ten years and if this is the case, purchases of securities of the private sector. The stop will come on the basis of a lasting improvement in monetary policy transmission or on the basis of the assessment that persistent tensions are due to fundamentals of the country. In other words, even when the process has begun, it turns out that there is no market turbulence at the root of the problem, but the accounts are in disorder, the ball goes back to the person concerned.

“Some components of the tool are better keep them confidential, there are some things that it is better not to make public and I guess you can understand ”, concluded Lagarde. “I assure you that we prefer not to use the ICT, but if we have to use it we will not hesitate”, and the Eurotower “will not be hostage to anyone”.

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