ECB Uncertainty

When Will the Bond Phase-Out Begin?

Germany European Central Bank
Mario Draghi has some explaining to do. Photo: AP
  • Why it matters

    Why it matters

    The uncertainty is harming markets, though investors are also worried that the ECB pulling the plug too soon could send stocks on a nose dive.

  • Facts


    • The ECB is trying to avoid a panic like the one that occurred in 2013, when the Fed announced the phase-out of its bond-buying program and sent stocks into a tailspin.
    • Inflation in the 19-nation euro zone rose by the largest amount in two years in September.
    • The ECB is currently spending €80 billion a month in corporate and government bonds of euro zone countries.
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A bogeyman is back, and it responds to the seemingly unremarkable name “tapering.”

It was the word the U.S. central bank, the Federal Reserve, used to refer to the phase-out of its bond-buying program a few years ago.

When then Fed Chairman Ben Bernanke announced, in May 2013, that the Fed was going to allow its bond purchases to expire, it triggered a medium-sized earthquake in the markets.

Now the markets – this time in Europe – are fearful of tapering once again.

When Mario Draghi appears before the press after the latest meeting of the governing council of the European Central Bank on Thursday, he will have some questions to answer.

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