Unlimited Bond Purchase

AAA

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.

INVESTOPEDIA EXPLAINS '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. Continuous Bond

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

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

    A debt investment in which an investor loans money to an entity ...
  4. European Union - EU

    A group of European countries that participates in the world ...
  5. Euro

    The official currency of the European Union's (EU) member states. ...
  6. Convertible Bond

    A bond that can be converted into a predetermined amount of the ...
Related Articles
  1. Junk Bonds: Everything You Need To Know
    Bonds & Fixed Income

    Junk Bonds: Everything You Need To Know

  2. The Advantages Of Bonds
    Investing

    The Advantages Of Bonds

  3. Corporate Bonds: An Introduction To ...
    Bonds & Fixed Income

    Corporate Bonds: An Introduction To ...

  4. Savings Bonds For Income And Safety
    Bonds & Fixed Income

    Savings Bonds For Income And Safety

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center