Draghi’s ‘big bazooka’

European stock markets were buoyed by European Central Bank head Mario Draghi's colossal bond-buying plan.

Last week the president of the European Central Bank (ECB), Mario Draghi, unveiled his "big bazooka" a bond-buying plan. This came on the heels of his promise to do "whatever it takes" to save the euro. For once, markets were impressed.

The ECB will buy troubled peripheral countries' bonds with a maturity up to three years in unlimited quantities provided the country has officially requested help from the eurozone's rescue fund. So in return for its bond yields (borrowing costs) being kept at reasonable levels by ECB purchases, the country must agree to a bail-out that would come with tough conditions.

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