The European Central Bank says it will free up short-term funding markets by lending back bonds it's bought as part of its stimulus programme. As David Pollard reports, it's also warned of heightened risk for the euro zone from an uncertain political environment.
Big money to solve big problems ... The ECB seen as likely to extend a massive 1.7 trillion euro asset buying programme. That could be decided on December 8th. Before that, another date looms: Italy's referendum. (Dec 4) (SOUNDBITE) (English) ECB VICE PRESIDENT, VITOR CONSTANCIO, SAYING: "It's true that the yields of Italian government bonds have gone up. They have gone up everywhere, a little bit more in Italy as a result of concerns about the result of the referendum, it's true but at levels that are still very low." Italy's bond yields have eased back - on a new ECB promise ... More of the bonds it's bought will be lent back to financial institutions - so that those bonds can be collateral for further lending. It coincides with a new ECB warning - of the danger to markets of political upheaval. One thing it doesn't see yet: the danger of an EU break-up. (SOUNDBITE) (English) ECB VICE PRESIDENT, VITOR CONSTANCIO, SAYING (on ITALY): "I don't see that risk still reflected in market prices." But after Brexit and Trump - Italy, France and Germany now face electoral tests. Britain held its vote back in June. (SOUNDBITE) (English) WILSON KING INVESTMENT MANAGEMENT, HEAD OF RESEARCH, RICHARD HUNTER, SAYING: "Brexit is clearly something that Germany is concerned about. They're not big fans of QE either, which obviously remains on the ECB's minds as well as other forms of monetary policy. I suspect there will be strong conversations going on between the UK and Germany, probably at the moment behind closed doors, let alone when it becomes public." December 8 also likely to hear the ECB call, again, for structural reform and looser fiscal policy. Until those happen, Europe's central bank left fighting the stimulus battle on its own.