ECB mulls caps on borrowing costs

The European Central Bank is considering buying the bonds of crisis-wracked eurozone countries to ensure borrowing costs do not rise beyond a pre-determined level, German newsweekly Der Spiegel said Sunday. The bank will define an upper limit for borrowing costs in countries such as Spain and Italy and intervene in the markets to ensure it is not breached, Spiegel said, without citing its sources. Spain and Italy have seen their borrowing costs shoot up during the eurozone crisis to levels that forced Greece, Portugal and Ireland to seek a bailout. At the end of trade on Friday, Spain was paying 6.39 percent to borrow for 10 years and Italy 5.76 percent. In contrast, Germany was paying 1.49 percent, as investors trust Europe\'s top economy to repay them. The so-called spread, or difference, between benchmark German bonds and the debt-wracked countries would be decisive for the proposed rate cap, Spiegel said. ECB President Mario Draghi announced earlier in August that his institution \"may\" buy bonds of struggling countries if they first apply for EU bailout funds and accept tough conditions in return. He said the details would be worked out before the next meeting of the ECB, scheduled for September 6. Spiegel said that ECB governors would decide then whether to implement the proposed borrowing cost cap.