comes to aid of eurozone QE drive with sales of German bonds
Eurozone central bankers, struggling to boost a flagging recovery, have
received help from Beijing for their ￠1.1tn quantitative easing plan
thanks to sales of German government debt by the People’s Bank of China.
The PBoC’s reserve management wing, the State Administration of Foreign
Exchange, has been selling some of its German government bonds since the
ECB began buying them in March, say two sources close to central banks
in China and Europe. 接近中国和
Safe does not deal directly with eurozone central banks, which purchase
bonds from investors via banks’ bond trading desks. But its sales of
German bonds are making life easier in the dealing rooms of Europe’s
monetary powers, where traders have been handed the difficult task of
finding ￠60bn of mostly government debt to buy each month as part of the
Concerns over the whether the Bundesbank, Germany’s central bank, could
find enough German bonds to buy have long surrounded the QE programme.
The Bundesbank must purchase around ￠10bn of bonds a month — a
potentially problematic amount due to low levels of debt issuance by the
German state, although ECB officials have repeatedly played down these
The Bundesbank has scoured the world for sellers, according to one
person familiar with the matter, including Safe. Under pressure to make
a return on its reserves portfolio, Safe has agreed to take advantage of
the high prices on offer for low-yielding German bonds.
“Chinese sales of German Bunds would certainly facilitate the ECB’s
quantitative easing operations, so this is an instance where the
interests of the ECB and PBoC are congruent,” said Eswar Prasad,
economist at Cornell University and former China division head at the
International Monetary Fund.
Sales by Safe, thought to hold hundreds of billions of euros-worth of
European government debt, would also help the ECB should an emerging
market slowdown threaten the single currency area’s recovery and force a
more aggressive package of monetary easing.
Officials in Frankfurt are expected to revamp QE in December in response
to the slowdown, pursuing options that include extending their deadline
for bond purchases past the current limit of September 2016 or upping
their monthly count for bond buying from the current level of ￠60bn.