The European Central Bank will provide shaky banks with $53 billion to prop them up against potential Greek fallout, ECB president Jean-Claude Trichet has announced. But the move will topple the whole EU financial system, an expert believes.
Speaking at a press conference in Berlin on Thursday, the ECB head, Jean- Claude Trichet, said that the bank would start a new covered bond purchase programme which would run for 12 months, starting from November. The ECB intends to spend $53 billion – 40 billion euro – on covered bonds, assets backed by mortgage loans or public-sector lending and perceived as safe to own, and will offer banks two additional unlimited loans of 12- and 13-month durations.But as economic analyst and author of the book 'The Currency Crash" Michael Mross believes, the move will only make the situation worse, as in his opinion the ECB “is committing suicide.”“Our central bank is committing suicide. On the one hand they are helping banks with billions and billions. They are buying junk bonds, billions and billions. I mean, where does this lead to? It is one of the last nails in the coffin of our central bank,” he told RT.Jean- Claude Trichet is resisting calls for an interest rate cut to spur growth, despite fears that the eurozone economy is sinking towards a renewed recession.“At the moment we are actually on a certain limit. We cannot go on making more debts,” Michael Mross says. “This is the contradiction we are living – making more debts means more growth, making more growth means more debts…. It means that the growth process is stopping now.”