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Mario Draghi set to unveil ECB bond-buying euro plan

Mario Draghi, president of the European Central Bank, is expected to unveil

details of a new bond-buying plan later, aimed at easing the eurozone's debt

crisis.

In July, Mr Draghi had said that he would do "whatever it takes" to save the

euro.

The ECB is expected to help cut the borrowing costs of debt-burdened eurozone

members by buying their bonds.

However, Germany's Bundesbank is vigorously opposed to the idea.

Jens Weidmann, the Bundesbank president, is concerned member states could

become hooked on central bank aid and fail to reform their economies

sufficiently.

But the majority of the 23 ECB council members are expected to support the

plan.

The bond markets are hoping for Mr Draghi to put flesh on the bones of an idea

that has been widely trailed in the run-up to the latest meeting.

Start Quote

When the Governing Council of the European Central Bank meets on Thursday, the

bankers will know that many regard it as the most important meeting in the

bank's history

Gavin Hewitt Europe editor

Several questions remain unanswered.

For example, will the ECB put a cap on the amount it is prepared to spend or

will the bond-buying be unlimited? Will ECB intervention be conditional on a

eurozone member first formally requesting financial aid from existing bailout

funds? And what type of bonds will the ECB buy?

If such questions are not answered, the markets could be disappointed, some

analysts are warning.

"Our expectation is that we get some more information but not all the

parameters today, so if the market is looking for even more than the leaks

suggested already, then the potential for disappointment is definitely there,"

said Norbert Aul, rate strategist at RBC Capital Markets.

Mr Draghi is hoping that ECB intervention in the bond markets will help reduce

the borrowing costs of debt-laden countries such as Spain and Italy and lessen

the likelihood of them needing to ask for a full sovereign bailout, an

eventuality that could bankrupt the eurozone and cause the collapse of the

euro.

Spain, which has already asked for 100bn euros ( 79bn) in state aid to help its

debt-stricken banks, is currently paying yields of 6.42% on its 10-year bonds,

while Italy's 10-year bond yields are 5.51%, below the critical 7% figure

thought likely to trigger a sovereign bailout request.