EU’s Gas Price Cap Scheme Could Backfire, Raise Volatility: ECB

A woman walks past the European Central Bank (ECB) headquarters in Frankfurt, Germany, on Jan. 28, 2021. Kai Pfaffenbach/Reuters

FRANKFURT—Proposed European Union rules aimed at tempering natural gas price spikes may actually jeopardize financial stability and need to be redesigned, the European Central Bank said on Thursday in a formal opinion.

The EU proposed a “market correction mechanism” last month aimed at tempering natural gas prices and market volatility after a spike in energy costs pushed inflation to record highs and raised financial market stress in energy derivatives trading.