Updated: 21/08/12 : 09:24:30
THE European Central Bank was yesterday forced to quash speculation over its plans to tackle the eurozone financial crisis, denying it was considering caps on bond yields to bring down borrowing costs for troubled governments. The ECB is readying plans to intervene in bond markets to try to drive down yields, which it considers are unjustifiably high for some eurozone countries. 'Der Spiegel', a German magazine, said over the weekend the central bank was considering establishing thresholds for sovereign bond yields, beyond which it would intervene to buy bonds.
The thresholds would be set relative to yields on German bonds, considered the eurozone's safest, the report said. However, the ECB was forced to come out yesterday and quash the rumours, saying it was "absolutely misleading to report on decisions which have not yet been taken and also on individual views, which have not yet been discussed by the ECB's governing council".