ECB's Weber reiterates doubts on bond purchases

31st May 2010, Comments 0 comments

German central bank governor Axel Weber, a member of the European Central Bank's governing council, reiterated on Monday his criticism of an ECB programme to buy sovereign bonds.

"Monetary policy has taken new paths to fight the crisis that I continue to view critically owing to the risks" involved in buying a country's debt, said Weber, an unofficial candidate to become the next ECB chief in late 2011.

He referred to a decision by the ECB's governing council to buy bonds issued by troubled eurozone countries like Greece, Portugal and Spain to fight speculation against those countries and allow them to obtain financing at reasonable rates.

Weber voted against the measure and has spent considerable time since explaining his position.

The German central bank governor said he was concerned above all about the ECB's independence from political pressure.

One should "draw a clear line of separation between responsibility for monetary policy and fiscal policy," Weber said in a speech given in Mainz, western Germany.

The ECB's duty is to maintain price stability and only an independent central bank can do so, he argued.

"We should now limit the risks," Weber continued.

"The operation must be carried out in a very targeted and limited way," he said.

It should "serve as a bridge until new state financing facilities" agreed by the European Union can take over, Weber said in reference to a massive rescue package drawn up by the EU and International Monetary Fund.

© 2010 AFP

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