Key Measures In Draghi's First Year As ECB Chief

By The Associated Press

FRANKFURT, Germany (AP) â¿¿ European Central Bank chief Mario Draghi has been in the job for a little over a year. Here are some of the key steps the bank has taken to ease Europe's financial crisis and provide a spark to the weak economy since he took office on Nov. 1, 2011

UNLIMITED BOND BUYS: The ECB announced Sept. 6 that it is willing to purchase the bonds of heavily indebted countries and lower their borrowing costs â¿¿ if they first ask for help from the eurozone bailout fund.

Bond purchases would drive bond prices up and interest yields down in the open market. Governments could then take advantage of those lower yields when they sell bonds to pay off old bonds that are coming due.

The ECB's plans have already helped lower borrowing costs in bond markets, at least temporarily, for Spain and Italy. High borrowing costs were threatening to push those countries into a financial collapse that could break apart the shared European currency.

One caveat: a country that wants help must first apply for a bailout to the eurozone rescue fund, the European Stability Mechanism â¿¿ and agree to take specific steps to reduce its deficit.

So far, the leading candidate â¿¿ Spain â¿¿ has been reluctant to do that because Prime Minister Mariano Rajoy does not want economic policy dictated by outsiders. But he may have no choice in the end.

The ECB says that by lowering borrowing costs, it will bring market interest rates more in line with its low benchmark rate. That means it can say the action falls within the bank's legal mandate to carry out monetary and interest rate policy. It's forbidden to use its monetary powers to support government finances directly.

CHEAP LOANS TO BANKS: The ECB made an unlimited amount of cheap, three-year loans available to banks on two occasions since late last year. In December, 523 banks borrowed ⿬489 billion ($608.17 billion) and in February 800 banks borrowed ⿬530 billion. The more than ⿬1 trillion action helped to relieve stress on banks, especially those that were having difficulty borrowing from other banks.

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