The International Monetary Fund is considering bold action to aid the eurozone, floating the possibility of a bond-buying proposal on Wednesday.
The Wall Street Journal reports Antonio Borges, a senior IMF official, said the International Monetary Fund could create a special financing tool to buy bonds in private markets as a way to help stem the eurozone’s debt crisis. However, Borges added that the idea hadn’t yet been vetted by the fund’s membership and there have been no formal requests from eurozone members for additional financing.
“Such a plan could aid countries such as Spain and Italy which face rising costs for financing in capital markets,” according to The Journal. “Borges said these countries have a problem of market confidence rather than solvency. IMF bond-buying interventions could help solve that problem. The IMF’s involvement in eurozone secondary bond market purchases would give an ‘additional element of credibility because of the conditionality the IMF requires,’ he said.”