European Central Bank Considering Buying Municipal Bonds to Alleviate City Debt

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ECB Headquarters in Frankfurt
Frankfurt am Main, Germany - September 9, 2015: Skyline of Frankfurt and new building of the Eurpean Central Bank (ECB)

The European Central Bank (ECB) is considering buying debt from some of the biggest cities in the European Union. Municipal bonds would be purchased from larger cities, such as Paris, in an attempt to alleviate pressure on some of the cities.

The ECB is also considering buying regional debt in areas such as Bavaria.

Regional bond buying is just one of the many attempts of the bank that are expected over the coming months. While no official statement has been made, the ECB has been discussing lowering interest rates in the country as well as helping several of the countries in the union that are struggling with high debt, high unemployment levels and struggling economies.

The goal of the ECB is to help improve the price of inflation, which remains stagnant. No official agreement has been made on municipal bonds, but in the markets, it may be possible. Paris is a good example where bonds may be purchased. The city has borrowed €4 billion in bonds and has sold €300 million worth of bonds.

Many cities in Spain and Italy are far too much for bond purchasing to be viable.

A report out of Germany reaffirms the idea of buying municipal debt, which would greatly help the country.

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