I have a feeling that some people think the Govt are borrowing from the ECB to pay for NAMA.
This is not the case.
The ECB does not lend to Govts. This is to protect its independence.
The ECB lends to comm banks.
NAMA will buy "assets" from the banks, as in the mix of loans. It will pay for them by issuing NAMA bonds to the banks.
The State will pay interest to the banks on these banks. I'm not 100% sure about the interest rate, ECB + 0.5% variable maybe.
The banks can then, if they wish, use these low-earning assets on their balance sheets as collateral when getting a loan from the ECB, at the ECB rate, 1% currently. The loan can last for a year max. The hope is that they lend on the funds borrowed from the ECB.
This is not the case.
The ECB does not lend to Govts. This is to protect its independence.
The ECB lends to comm banks.
NAMA will buy "assets" from the banks, as in the mix of loans. It will pay for them by issuing NAMA bonds to the banks.
The State will pay interest to the banks on these banks. I'm not 100% sure about the interest rate, ECB + 0.5% variable maybe.
The banks can then, if they wish, use these low-earning assets on their balance sheets as collateral when getting a loan from the ECB, at the ECB rate, 1% currently. The loan can last for a year max. The hope is that they lend on the funds borrowed from the ECB.