The European crisis continues

Europe's bank acts to ease debt crisis and calm markets

European Central Bank pledges to buy government bonds from Italy and Spain after day of frantic discussions

The Guardian, Monday 8 August 2011

The European Central Bank has moved to halt Europe's runaway debt crisis by pledging to buy government bonds from Italy and Spain.

The move to prop up Europe's struggling nations came after a day of frantic discussions between the finance ministers of the world's leading economies. Markets open for the first time since Standard & Poor's decision to cut the US's credit rating from AAA late on Friday.

In a statement, the ECB said it welcomed announcements by Spain and Italy of "new measures and reforms" aimed at the financial problems and urged both governments to roll them out swiftly.

The agreement of the bank's policy-making governing council is a watershed moment for the ECB. The central bank has so far insisted that the main responsibility for acting lies with national governments. But last week a more modest bond buying effort failed to halt the European slide.

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