Arab Today, arab today ecb will stay within mandate assures board member
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ECB will stay within mandate, assures board member

Arab Today, arab today

Arab Today, arab today ECB will stay within mandate, assures board member

Berlin - AFP

The European Central Bank will stay within its mandate and intervene on the secondary debt markets only in conjunction with European Union rescue funds, board member Joerg Asmussen said on Monday. \"We will act within the framework of our mandate,\" Asmussen said in a speech in Germany, while insisting on the \"complete independence\" of the ECB. Earlier this month, ECB chief Mario Draghi suggested the central bank could restart buying bonds of crisis-hit member states to drive down their crippling borrowing costs, following trouble in Spain and Italy. The ECB \"may undertake outright open market operations of a size adequate to reach its objective,\" Draghi had said. But over the weekend in Der Spiegel magazine, German central bank chief Jens Weidmann, who sits on the ECB governing council, criticised as dangerous any plan by the ECB to buy member states\' bonds, warning countries could get \"hooked\" on the intervention \"like a drug\". \"For me such a policy comes close to financing states with the printing press,\" Weidmann told the magazine. \"The manna from central banks will forever sharpen greed,\" the Bundesbank chief said. \"One should not underestimate the danger that financing by central banks can get one hooked like a drug.\" The German finance ministry also has concerns about any buying of states\' bonds by the ECB, which it fears could compromise the Frankfurt-based bank\'s independence, Der Spiegel reported . The magazine noted \"fierce arguments\" within the ECB itself over the form of the programme between representatives of countries such as Spain or Italy and those from northern Europe who think it should be used only in \"extreme situations\". Former German deputy finance minister Asmussen, who is considered a monetary conservative, said the ECB would only intervene in parallel with the European Financial Stability Facility and its successor the European Stability Mechanism, EU funds that offer rescue loans in return for strict controls on national budgets. Asmussen repeated Draghi\'s comments that the ECB would only intervene on short-term debt and said that the programme was still in development. In 2010 the ECB carried out a bond-buying blitz under the Securities Market Programme (SMP) to help debt-wracked eurozone countries that were finding it difficult to drum up financing in capital markets. The controversial programme, that pushed key figures at the ECB to resign, has lain dormant since February. At one point, purchases reached as much as 22 billion euros in a single week, mainly in bonds from Greece Ireland, Portugal, Italy and Spain.

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