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.