Forex Flash: ECB keeps financial markets undisturbed – Merrill Lynch

Despite looming uncertainty, financial markets aren't disturbed thanks to ongoing central bank support by the ECB. "The ECB delivered the closest we are ever likely get to forward guidance when citing its commitment to an accommodative monetary policy for as long as necessary and that both spot and forward Eonia rates would be monitored carefully for any unwarranted tightening", wrote Merrill Lynch analysts, adding that the ECB also threw the ball back into the court of governments with regard to reviving credit. "It argued that cleaning up banks’ balance sheets is not its business. But as we argued before, a balance sheet clean-up could become ECB business if a fiscal backstop to recap the banks can be assured", they added, pointing to a still long road to reach a Eurogroup agreement on this as "North European countries refuse to share the costs of clearing legacy assets, while some south European economies cannot afford to add bank recapitalization costs to the public sector balance sheet".