Uncertainty over Greece is helping force up the borrowing costs for Spain and Italy.
The objective of the program is to reduce the borrowing costs of state and local governments.
The central bank will do whatever it takes to keep the borrowing costs of vulnerable countries down.
It's good business for the banks and it is lowering the borrowing costs of countries at risk.
Last Friday the borrowing costs for a 10-year government bond in Italy spiked at 8% before dropping back.
And reducing the borrowing costs of the profligate could increase them for the virtuous and reduce the incentive for reform.
Nevertheless, it is unusual for such a gap to emerge between the borrowing costs of big companies and rich-world governments.
The borrowing costs for 10-year bonds at 7.2% are clearly not sustainable.
President Hollande believes in "solidarity", where the debt of eurozone countries becomes common debt, so reducing the borrowing costs of the weaker countries.
By promising to do whatever it takes to defend the currency he brought down the borrowing costs of countries like Spain and Italy.
Spanish Prime Minister Mariano Rajoy warned yesterday that Spain might not be able to continue with the borrowing costs at the level they are.
The mere existence of the bond purchase offer has lowered the borrowing costs for Italy and Spain even though no bonds have been bought.
This also led to strong gains for the euro and meant the borrowing costs of the region's financially stressed countries fell from their precarious levels.
We still do not know how aggressive the European Central Bank will be in buying bonds, and so lowering the borrowing costs of troubled countries.
Illy's comments come as the borrowing costs of Spain, another pillar of the bloc, push toward 6%, feeding fears the debt crisis is spreading to larger economies.
Credit-default swaps, a type of insurance against bankruptcy, suggest that the borrowing costs of big emerging-markets firms have spiked along with those of their home countries' governments.
And the ECB may have brought Europe one step closer to debt mutualisation, prompting a narrowing of the spread between the borrowing costs of Germany and the periphery.
The borrowing costs for Spain and Italy remain dangerously high.
Italy has backed the idea, while billionaire investor George Soros told the BBC that the bonds could be an effective way of reducing the borrowing costs of highly-indebted nations.
The borrowing costs for Spain and Italy went up.
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In practice, some of these swaps or interest-rate hedging products increased the borrowing costs of struggling companies or prevented them from taking advantage of the sharp fall in interest rates since 2008.
Draghi must balance an eagerness to curry favor with the German contingent at the ECB against growing financial market pressure to intervene on a bigger scale to lower the borrowing costs of Italy and Spain.
However in those glorious circumstances, the price of gilts would almost certainly fall and the borrowing costs for the government would rise - because investors would feel less in need of the safety supposedly offered by gilts.
The Fed has already expanded its balance sheet to epic proportions, while on Thursday ECB chief Mario Draghi announced a third bond buying plan that should help push down the borrowing costs of struggling peripheral nations, particularly Spain and Italy.
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For reasons I've discussed before, the feeling is the ECB cannot be a real "lender of last resort" for the eurozone if it sets a limit to the amount of money it is going to spend reducing the borrowing costs of governments such as Spain.
JPMorgan, an investment bank, reckons that an increase of just 0.2 percentage points in the borrowing costs of British banks such as Lloyds Banking Group and Royal Bank of Scotland would trim their earnings by 8-11% next year, assuming they could not immediately pass these costs on to customers.
All of which is a long-winded way of explaining why the borrowing costs of the government perceived to be most financially over-stretched, Spain, have soared today to record levels - in that the dispute over whether to go for a banking union shows that the eurozone is as far as ever it was from a fundamental solution to its woes.
And if market confidence is bashed as much as it may be, there will be a flight away from debt perceived to be riskier - so the European Central Bank will doubtless have to redouble efforts to buy Spanish and Italian government bonds, to prevent the borrowing costs of the Spanish and Italian governments moving back up to dangerous levels.
So gilt prices rise, and the implied borrowing costs for the government fall, when the risks of putting money into companies are perceived to be too great.
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