ECB policymakers debated 500-750 billion euros package before compromise, sources say

FILE PHOTO: European Central Bank (ECB) headquarters building is seen in Frankfurt, Germany July 20, 2017. REUTERS/Ralph Orlowski

FRANKFURT (Reuters) - European Central Bank policymakers debated expanding their pandemic-fighting programme by between 500 billion euros ($566 billion) and 750 billion euros on Thursday before settling for a compromise figure, three sources told Reuters.

The ECB eventually increased its Pandemic Emergency Purchase Programme (PEPP) by 600 billion euros to 1.35 trillion euros and extended it until June 2021 to help the euro zone cope with the consequences of the coronavirus outbreak.

But policymakers from a number of countries including France, Germany and the Netherlands argued for a smaller increase in line with market expectations for half a trillion euros, the sources said.

However, one policymakers from the bloc’s south made the case for a 750 billion euros expansion, they added.

An ECB spokesman declined to comment.

The scheme was launched in late March and has seen the ECB overbuying Italian government bonds in a bid to cap runaway borrowing costs for the virus-stricken, indebted government in Rome and keep the euro zone’s financial markets from fragmenting.

But this deviation from the ECB’s country-quotas was starting to alarm some ECB policymakers at Thursday’s meeting, who said the ECB should steer closer to its capital key now that the programme is set to run for longer, the sources said.