ECB steps up ‘whatever it takes’ fight to save eurozone

The European Central Bank scrapped most of the bond-buying limits in its €750 billion ($819 billion) pandemic emergency program, in a landmark decision that massively boosts its firepower to fight the economic fallout from the coronavirus.

Government bonds rallied across the eurozone after the ECB released a legal document that said the issue limits, which constrained sovereign bond-buying to a third of each of its member state's debt, "should not apply" to its new program.

Purchases started on Thursday, and the ECB said it will "explore all options and all contingencies to support the economy to counter this extraordinary shock."

The program, scheduled to continue until at least the end of 2020, will also include bonds with shorter maturities than under its ongoing quantitative-easing operations.

Short-dated Italian debt saw the biggest gains, with two year yields dropping as much as 15 basis points to 0.3%, the lowest level in a week. German 10-year yields fell to as low as -0.32%. Greek bonds, which will be included in PEPP after being shut out of quantitative easing until now, extended their rally.

"The eurosystem will not tolerate any risks to the smooth transmission of its monetary policy in all jurisdictions of the euro area," the ECB said in the legal document.

The dramatic move tallies with President Christine Lagarde's comment that there are "no limits" to the central bank's commitment as the economy faces a deep recession due to restrictions intended to stem the spread of the coronavirus.