Draghi ignores calls for ECB to step into breach
Bank chief insists focus should be on eurozone leaders' delay in beefing up role of bailout fund
Saturday 19 November 2011
Mario Draghi, president of the European Central Bank, ignored calls for his institution to play a greater role in resolving the eurozone sovereign debt crisis yesterday and instead asked why European governments have not yet delivered on their own commitments.
Referring to last month's agreement by eurozone leaders to increase the powers of the single currency bloc's €440bn (£378bn) European Financial Stability Facility bailout fund, he asked: "Where is the implementation of these long-standing decisions?"
Mr Draghi, speaking at a European banking conference in Frankfurt, argued the primary purpose of the ECB was to safeguard price stability, implying that unorthodox measures such as pledging to backstop individual governments would jeopardise that goal. He said: "Gaining credibility is a long and laborious process... but losing credibility can happen quickly."
Jens Weidmann, head of Germany's Bundesbank and an ECB governing board member, was more explicit than Mr Draghi in rejecting demands for the central bank to play a greater role.
Mr Weidmann told the Frankfurt conference: "The lack of success in containing the crisis does not justify overstretching the mandate of the central bank and making it responsible for solving the crisis."
This message was echoed by another ECB board member, Jose Manuel Gonzalez-Paramo, who – speaking in Spain – argued: "The sovereign debt crisis is primarily the responsibility of governments."
The strongest pressure on the ECB to play a greater role in the crisis has come from the French government, which proposed that the central bank should lend to the EFSF.
Other governments have called for the ECB simply to commit to buying up the bonds of European states in whatever quantities are needed to allow them to borrow at sustainable rates.
The German government of Angela Merkel has blocked both proposals. Earlier this week, Ms Merkel said: "If politicians think the ECB can solve the euro crisis, then they are mistaken".
The ECB has bought about €187bn in eurozone sovereign bonds since the crisis began last May in an attempt to stabilise bond markets. And there have been reports of it buying Italian bonds (which have come under unprecedented pressure) over the past week. But the ECB has always stressed the temporary nature of this programme and it is eager for the eurozone bailout fund to take over this stabilisation role. The yield on Italian 10-year bond yields fell to 6.7 per cent yesterday and the rate on equivalent Spanish sovereign debt fell to 6.4 per cent.
However, earlier this week Madrid had to pay almost 7 per cent at an auction of 10-year bonds, which is close to levels that saw other eurozone nations forced to seek external bailouts.
And fear remains elevated among debt market investors. Josef Ackermann, chief executive of Deutsche Bank, admitted to the Frankfurt conference that banks are still experiencing a difficulties borrowing on the capital markets.
He said: "Short-term financing is fine, but the big question is how we can ensure long-term funding. The willingness of investors to make long-term investments in banks is not very pronounced."
The Greek finance minister, Evangelos Venizelos, added his voice to those calling for Mr Draghi to intervene more in the crisis. He said: "The ECB, like every central bank, must help the eurozone overcome the crisis, in every possible way."
- 1 Arizona shooting: Gun instructor accidentally killed by nine-year-old girl with Uzi
- 2 Miley Cyrus' homeless MTV VMAs date, Jesse Helt, is wanted by the police
- 3 Paul Scholes: Manchester City were so good against Liverpool I felt like turning the television off
- 4 Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
- 5 Pamela Anderson rejects ice bucket challenge because of ALS experiments on animals: 'Mice had holes drilled into their skulls'
-
Kensington flat branded ‘uninhabitable’ by estate agent on sale for a bargain £600,000
-
Miley Cyrus' homeless MTV VMAs date, Jesse Helt, is wanted by the police
-
Arizona shooting: Gun instructor accidentally killed by nine-year-old girl with Uzi
-
Notting Hill Carnival: Woman shares selfie after being ‘punched in face for telling man to stop groping her’
-
Enormous wasps' nest covering bed found in woman's spare room
-
Exclusive: We share blame for creating 'jihad generation', says Muslim strategist
-
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
-
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
-
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
-
Do you realise just how foolish the UK looks?
-
Arizona shooting: Gun instructor accidentally killed by nine-year-old girl with Uzi
- < Previous
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
- Next >
i100: 17 things you won't miss about renting with friends
The housemates who label everything... and more.
Visit Kent with Simon Calder
Simon Calder explores the delights of England’s Garden in the south-easternmost corner of Britain, now only a swift rail ride away. Watch the video here.
Visit Essex with Simon Calder
Simon Calder gets acquainted with the grassy hills, crinkled coastline and picture-perfect market towns of this dreamy rural haven. Watch the video here.
Forget top summer reads – here are our top five summer listens
Lounging by the poolside with a book – it’s perhaps the defining image of a civilised summer holiday. Free from the stresses of work, we can take the time to reacquaint ourselves with the classics – or perhaps indulge in something a little lighter.
Update your holiday wardrobe
Update your holiday wardrobe with tropical prints, the perfect pair of sandals and some seriously stylish swimwear to make a splash in. Bon voyage.
Get Reddy
For a hint of autumnal elegance opt for boozy hues of tomato, rouge and claret. Get reddy says Melanie Wilkinson
Hemocyl - a revolutionary remedy for haemorrhoids
Embarrassment leads many to believe they are suffering alone. However half of the UK may suffer from haemorrhoids in their lifetime.
Get the look. See the trends.
Westfield and Snapfashion team up to create a new digital styling tool. Create a style board or browse this season's trends. #editme.
Jake Bugg: "I’m the one I have to answer to…"
Fresh out of his teenage years, singer-songwriter Jake Bugg has achieved the kind of success that most aspiring musicians can merely dream of.
Enter the latest Independent competitions
Win anything from gadgets to five-star holidays on our competitions and offers page.
Business videos from commercial thought leaders
Watch the best in the business world give their insights into the world of business.
Independent Dating
iJobs Money & Business
Junior Asset Manager
£25000 - £35000 Per Annum: The Green Recruitment Company: Job Title: Junior As...
HR Generalist (standalone) - Kent - £30,000
£28000 - £30000 per annum: Ashdown Group: HR Generalist / HR Officer (standalo...
Oracle Developer/IT Analyst
£35000 - £36000 per annum + benefits: Ashdown Group: A market leading financia...
Investment Analyst
£33000 - £40000 Per Annum Discretionary profit share: The Green Recruitment Co...