European Central Bank President Mario Draghi speaks during the monthly news conference in Frankfurt Thursday. Draghi unveiled a long-awaited program to buy up bonds and help bring down the borrowing costs of Europe's struggling governments. [Photo/Agencies]

The European Central Bank (ECB) on Thursday unveiled details of a new bond-buying program, which will be unlimited and sterilized.

The governing council decided on the modalities for undertaking Outright Monetary Transactions (OMTs) in secondary markets for sovereign bonds in the euro area, the ECB president Mario Draghi read out in a statement.

In another press release, Draghi said no ex-ante quantitative limits are set on the size of OMTs and the transactions will be focused on the shorter part of the yield curve, and in particular on sovereign bonds with a maturity of between one and three years.

Just like the Securities Market Program (SMP), under which the ECB started to buy euro area government bonds in May 2010, the ECB decided that the liquidity created through OMTs will be fully sterilized with a clear purpose of assuaging inflation concerns.

The SMP, worth 209 billion euros (264 billion U.S. dollars), has been terminated.

Strict and effective conditions will be attached to the OMTs and European Financial Stability or European Stability Mechanism programs, Draghi said, adding the ECB would seek the involvement of the International Monetary Fund to design country-specific conditions.

The ECB clarified bonds under the OMTs would be treated the same as private or other creditors. The ECB will publish the aggregate OMT holdings and their market values on a weekly basis.

Draghi said economic growth in the euro area is expected to remain weak, citing ongoing tensions in financial markets and heightened uncertainty weighing on confidence and sentiment.

"OMTs will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro," he said.

The governing council would decide on the start, continuation and suspension of OMTs after a thorough assessment, Draghi added.

Following remarks that he would do whatever it took to preserve the euro, Draghi said at a press conference in August that the ECB would buy sovereign bonds of euro area governments if they officially ask for bailouts from the ESM.

Also on Thursday, the ECB announced additional measures to loosen the collateral requirements in a bid to widen the financial institutions' access to the ECB money.

The German Central Bank Bundesbank chief Jens Weidmann, joined by German economy minister Philipp Roesler, has been opposing the bond-buying plan out of fear that it might erode the willingness of reforms by euro area countries. A local German media reported earlier that Weidmann even considered resign as the head of Bundesbank.

Shares not only in Europe, but in the United States and other places across the globe soared on the new ECB bond-buying program. The FTSE 100 Index in London climbed 2.11 percent, the CAC 40 index in Paris picked up by 3.06 percent and DAX in Frankfurt advanced by 2.91 percent from Wednesday.

Commenting on the ECB bond-buying program, the International Monetary Fund managing director Christine Lagarde said, "we strongly welcome the ECB's new framework, the OMT ... the IMF stands ready to cooperate within our frameworks..."

However, the release of the program does not mean a ready resolution to the lingering debt crisis that has dwelt on Europe for over two years. The Constitutional Court of Germany is scheduled to rule on the legality of the permanent rescue fund ESM on Sept. 12, which posed one of the major political obstacles.

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