- Germany's Economy Ministry
The ECB has started to provide some hints concerning the volume of its balance sheet expansion plan announced last week. Markets are concerned that purchases of asset-backed securities could potentially lead to some troubles in the Euro zone, particularly as securities of periphery countries will not be excluded from the transactions, despite their rating being below investment grade. However, the ECB Vice President Vitor Constancio reassured that the ECB will not buy "junk securities with a high risk of default". He said that 1 trillion euros of asset-backed securities and covered bonds are eligible for purchase.
Meanwhile, Chancellor Angela Merkel's government is discussing measures to bolster growth in Germany, the Euro zone's weakening powerhouse, amid increasing odds that Europe's number one economy risks falling into recession, as sluggish growth in the Euro bloc and political tensions with Russia undermine demand. One of the steps includes lowering the mandatory pension contribution by 0.6 percentage point, which would inject 6 billion euros into the German economy. Meanwhile, the Bank of France kept its GDP growth outlook for the third quarter intact at 0.2%. The bank also said that manufacturing, services and construction sectors in France face ongoing problems from stagnant or even deteriorating confidence across the economy's segments.
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