— Leave any bond purchases to the EFSF/ESM. The ECB could express willingness to buy the bailout funds' bonds in the open market. That means the ECB could support the effort indirectly.
— Drop the ECB's insistence on being paid in full on any of the bonds it owns in case a country defaults. Such ECB "seniority" could make investors afraid they would be behind the bank in the line to get paid back — and lead them to demand higher yields on a country's bonds. That's the opposite of what the ECB would be trying to achieve. But if the ECB makes a loss on their bonds, that's passed back to the governments that finance it.
"A reactivation of the SMP only makes sense if other measures are decided on," such as dropping the bank's preferred creditor status, said Christoph Balz, analyst at Commerzbank. He warned that dropping that "seniority" status could create new problems. Any ECB losses would be passed back to national governments as part of the bank's profit or loss for the year. That means losses on Spain could hit troubled Italy, for instance.
Such a change "is not so easy to do," Balz said. "This argues for Draghi likely not making any announcement this week of any big program to buy bonds," said Balz.
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