Why the ECB Could Get Some Junk With Its Bond-Buying Program

In times of crisis lend freely against good collateral, Walter Bagehot suggested back in 1873. Almost 150 years later, the influential essayist's dictum may prove to be easier said than done for the world's policymakers. Earlier this month the European Central Bank announced it would begin buying corporate bonds carrying investment-grade ratings in its efforts to further lower the region's borrowing costs. While technical details of the buying program have yet to be announced, the central bank has said that it plans to broadly follow the Eurosystem's existing collateral framework, which requires debt eligible for ... READ MORE