WASHINGTON, Sept. 6 (Xinhua) -- The head of the International Monetary Fund (IMF) Thursday welcomed the European Central Bank ( ECB)'s decision to purchase the government bonds of debt-mired countries in the eurozone to push down their borrowing costs.
"We strongly welcome the ECB's new framework, the Outright Monetary Transactions (OMT), for intervention in sovereign bond markets of countries accepting EFSF and ESM support for their macroeconomic adjustment programs and adhering to the associated structural and fiscal reform efforts. The IMF stands ready to cooperate within our frameworks," Christine Lagarde, managing director of the IMF, said in a statement.
"Decisive implementation of the new intervention program will help repair monetary transmission, and support countries' efforts to secure finance at a reasonable cost while they undertake sustained macroeconomic adjustment. We see the ECB's action as an important step toward strengthening stability and growth in the Euro Area," she added.
The ECB on Thursday unveiled its new bond-buying program, called "Outright Monetary Transactions," for open-ended purchases of short-term government bonds to keep borrowing costs down for struggling countries.
The governing council decided on the modalities for undertaking Outright Monetary Transactions in secondary markets for sovereign bonds in the euro area, ECB president Mario Draghi said in a statement. The liquidity created through the program will be fully sterilized with a clear purpose of assuaging inflation concerns, the ECB noted.
The new program will replace the existing Securities Market Program under which the ECB started to buy euro area government bonds in May 2010.