Governments must not rely on external help: ECB chief

3rd November 2011, Comments 0 comments

Governments should not rely on external help to alleviate market pressures, the European Central Bank said Thursday, in an indication of its reluctance to extend its controversial bond-buying programme.

Asked at a news conference whether the ECB would continue to help out debt-wracked countries by buying up their bonds, the bank's new chief Mario Draghi said such action would not get to the root of the current debt crisis.

The key "is not to count on external help that could alleviate temporary market pressures but to count on countries' capacity to reform themselves with the right economic policies," Draghi said.

In the current turmoil of the eurozone's debilitating debt crisis, many people believe the ECB is the only institution in the single currency area to have the firepower to calm the debt tensions.

In May 2010, in one of the most controversial decisions of his career, the bank's then president Jean-Claude Trichet announced the ECB would buy countries' debt if they found difficulty to drum up financing the usual way via the markets.

Critics said Trichet was taking the ECB beyond its mandate to guarantee price stability in the euro area.

The decision was controversial and led to the resignation of two of the ECB's most experienced German policymakers -- Bundesbank President Axel Weber and chief economist Juergen Stark.

In addition to its purchases of Greek bonds, the ECB has also bought up Italian and Spanish bonds and markets had been waiting to hear whether the ECB's new chief Draghi would continue or even increase the disputed programme.

© 2011 AFP

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