ECB Bond-Buying Offer May Fail to Motivate Banks to Sell
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Even if the European Central Bank clears all the hurdles to enact a government-bond buying program, there will be one final obstacle: finding motivated sellers.
That’s because banks would earn less from the cash proceeds than from keeping euro-area sovereign debt, says Steven Major, global head of fixed-income research at HSBC Holdings Plc in London. The central bank charges banks for holding cash overnight, part of an earlier strategy to encourage lending. The so-called negative deposit rate is now minus 20 basis points.