By Scott Kanowsky
Investing.com -- The European Central Bank has said it will move to accelerate the completion of a new instrument designed to prevent a disorderly blowout in borrowing costs in weaker eurozone countries.
In a statement following an emergency meeting of the ECB's Governing Council to address the rise in borrowing costs on Wednesday, policymakers vowed to act against risks of this so-called financial "fragmentation."
"The pandemic has left lasting vulnerabilities in the euro-area economy which are indeed contributing to the uneven transmission of the normalization of our monetary policy across jurisdictions," the ECB said in the statement.
The announcement comes less than a week after the committee's last vote, which left some ECB watchers looking for more precise details about how the central bank planned to address fragmentation risks.
The ECB also said it would apply "flexibility" when re-investing redemptions from its massive COVID-era bond-buying program to help bolster more indebted members.
The Italian and German 10-year bond yields were both down by about 7%, following the ECB's statement. The closely watched spread between the two benchmarks rose to about 243 basis points as of 09:08 EST (1308 GMT), a rise of 5.02% on the day - but still tighter than levels reached on Tuesday.
Meanwhile, the euro pared back earlier gains on Wednesday to remain basically unchanged against the dollar.
Looking ahead, ECB President Christine Lagarde is scheduled to speak in London later today, with Reuters reporting that she is expected to take questions.