ECB debt purchases appropriate but risky: Bundesbank head
A European Central Bank decision to buy government debt is appropriate given the eurozone's debt crisis but it also carries substantial risks, the head of the German central bank said Monday.
The move was "appropriate" in light of severe financing problems faced by eurozone countries like Greece, but comprised "considerable risks," Axel Weber told the German financial daily Boerse Zeitung in comments released ahead of their publication on Tuesday.
"I see this part of the governing council's decision critically, even in this extraordinary situation," added Weber, a leading candidate to succeed Jean-Claude Trichet as ECB president next year.
"It's important to keep these risks as slim as possible," he stressed.
The ECB said early Monday that it would intervene in securities markets to buy government and private debt, a move that represents unprecedented and controversial support for troubled eurozone governments.
While providing critical breathing space for eurozone countries that face mounting problems getting financing on private capital markets, the decision raises questions about the the ECB's independence from political influence.
Trichet responded on Monday by telling reporters in Basel, Switzerland: "We are fiercely and totally independent.
"This decision is the decision of the (bank's) governing council and not the result of any kind of pressure of any sort."
© 2010 AFP