Unlimited Bond Purchase

DEFINITION of 'Unlimited Bond Purchase'

A program undertaken by the European Central Bank in October 2012 under its president, Mario Draghi, to buy large quantities of government bonds from financially struggling eurozone countries, such as Spain and Italy. The unlimited bond purchase program was considered a crisis-averting measure amid fears that the euro would fail because of widespread economic turmoil.

The program was considered by some observers to be a move toward greater central control in the European Union. The EU central bank's original purpose was simply to keep down inflation.

BREAKING DOWN 'Unlimited Bond Purchase'

The EU central bank's unlimited bond purchase program spread the sovereign bonds' credit risk from individual bond holders to all the EU countries. It also lowered interest rates on Spain and Italy's bonds, reflecting that they were perceived to be less risky with the new bond purchase program in place. Stock market investors reacted favorably to the news, as well.

RELATED TERMS
  1. Bond

    A debt investment in which an investor loans money to an entity ...
  2. Continuous Bond

    A financial guarantee commonly used in international trade that ...
  3. Bond Rating

    A grade given to bonds that indicates their credit quality. Private ...
  4. Convertible Bond

    A bond that can be converted into a predetermined amount of the ...
  5. European Union - EU

    A group of European countries that participates in the world ...
  6. Corporate Bond

    A debt security issued by a corporation and sold to investors. ...
Related Articles
  1. Bonds & Fixed Income

    Junk Bonds: Everything You Need To Know

    Don't be fooled by the name - junk bonds may be for you if you know how to analyze them.
  2. Investing

    The Advantages Of Bonds

    Bonds contribute an element of stability to almost any portfolio and offer a safe and conservative investment.
  3. Bonds & Fixed Income

    Corporate Bonds: An Introduction To Credit Risk

    Corporate bonds offer higher yields, but it's important to evaluate the extra risk involved before you buy.
  4. Bonds & Fixed Income

    Savings Bonds For Income And Safety

    Bonds offer undeniable benefits to investors, including safety and tax advantages.
  5. Investing Basics

    Interest Rates And Your Bond Investments

    By understanding the factors that influence interest rates, you can learn to anticipate their movement and profit from it.
  6. Budgeting

    Is Living in Europe Cheaper than in America?

    Learn how living in Europe has financial advantages over living in the United States. Discover the benefits to take advantage of when it makes financial sense.
  7. Personal Finance

    5 Places Where Your Travel Dollar Goes Furthest

    The dollar is pretty strong right now, but where is it strongest? Canada? South Africa? Europe? Here are five places to travel to right now on a budget.
  8. Forex Education

    Four Currencies Under the Spotlight in 2016

    With currencies having become the “tail that wags the dog,” in terms of their impact on the global economy, these four currencies will be under the spotlight in 2016.
  9. Investing

    Which Countries Will Drive Global Growth in 2016?

    Given the volatility that has already shaken the global economy, the world's largest economies will be leaned on to stimulate growth in 2016
  10. Investing

    2 Opportunities Amid Today’s Market Volatility

    As you prepare your portfolio for the market volatility ahead this year, here are a few investing ideas to consider.
RELATED FAQS
  1. In what ways does Bayesian probability support the probability default model when ...

    During the European debt crisis, several countries in the Eurozone were faced with high structural deficits, a slowing economy ... Read Full Answer >>
  2. How do wholly owned subsidiaries operate in the European Union?

    Regulatory authorities in the European Union (EU) are suspicious of wholly owned subsidiaries, or at least their relationship ... Read Full Answer >>
  3. What are the most common market indicators to follow the European stock market and ...

    Market indicators can be used by technical analysts to measure the movements of major exchanges or indexes. Almost all market ... Read Full Answer >>
  4. Why doesn't England use the euro?

    England, as part of the United Kingdom, is the most notable member of the European Union that has elected not to use the ... Read Full Answer >>
  5. What are austerity measures?

    Austerity measures are attempts to significantly curtail government spending in an effort to control public-sector debt, ... Read Full Answer >>
  6. What is the best method of analysis for forex trading?

    Types Of Analysis Used In ForexForex analysis is used by the retail forex day trader to determine whether to buy or sell ... Read Full Answer >>
Hot Definitions
  1. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  2. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  3. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  4. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  5. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
Trading Center