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7/4, 8:13 PM (Source: TeleTrader)
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Anti-fragmentation tool needs specific conditions - Nagel

European Central Bank Governing Council member Joachim Nagel stated on Monday that only "exceptional circumstances" would justify the potential use of the anti-fragmentation instrument that the bank had signaled about last month.

Speaking at the Frankfurt Euro Finance Summit, the Deutsche Bundesbank president warned that "it would be fatal if governments were to assume that the Eurosystem will ultimately be ready to assure favorable financing terms for the member states."

According to Nagel, the future anti-fragmentation tool should be used if at least three criteria are met. If "interest rate spreads are fundamentally unjustified," if monetary policy "transmission mechanism is impaired" and if the previous two are "limiting the Eurosystem's ability to maintain price stability in the euro area," only then should the ECB discuss whether to utilize the instrument, he explained.

Baha Breaking News (BBN) / MS