How would the purchase of debt lent to Italy by Central Bank of Europe reduce its loan rates?



I read some excerpts from a report as quoted “Central Bank of Europe plans to buy the debt lent to Italy so as to reduce the costs at which Italy seeks the loan”.This is one of the measures to weaken the ill impact of economic crisis in Italy.
I want to know how this measure will work?

How would the purchase of debt lent to Italy by Central Bank of Europe reduce its loan rates?
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2 Replies to “How would the purchase of debt lent to Italy by Central Bank of Europe reduce its loan rates?”

  1. Central Bank of Europe takes over the debt liability to the creditors and lends to Italy at a reduced rate of prolonged period.


  2. US budget provides 0.2 T for interest payments which is 20% of the total deficits. US debt has reached 14 T ie as much as their GDP and threefold their budget.

    What I gather from your report is that, Central Bank of Europe will buy the debt from lenders and allow Italy to pay less interest. cost of a loan is defined as interest payable on it.





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