ECB chief defends bond-buying programme

31st October 2011, Comments 0 comments

Jean-Claude Trichet, who steps down as president of the European Central Bank later on Monday, rejected criticism of the bank's controversial bond-buying programme in a television interview.

Speaking to CNBC, Trichet said the decision to start buying up sovereign bonds of eurozone countries finding it difficult to secure financing via the markets was no easy one.

"There is no easy decision for a central bank in any time," the 68-year-old Frenchman said, adding it was because "we were in an abnormal situation".

The ECB launched its bond-buying programme in May 2010 to support Greece which found itself facing prohibitively high borrowing costs.

It more recently also bought bonds of both Italy and Spain on the secondary markets in an effort to push down their borrowing costs.

Trichet justified the moves by insisting they were only a temporary measure.

But his critics argued the decision took the ECB beyond its core mandate, which is to keep a lid on inflation in the 17-nation eurozone.

Two of the ECB's most experienced German policymakers -- Bundesbank President Axel Weber and chief economist Juergen Stark -- resigned in protest at the bond buying policy.

In the interview with CNBC, Trichet pointed the finger at governments, saying their profligate spending had created a situation which had left the ECB with no other choice but to act.

In a separate interview with the BBC, Trichet was asked whether Europe was having to eat humble pie in going with cap in hand to China to finance a debt bailout.

"Not at all," he replied. "We are in a global world. How do you think other countries in the advanced world are financed. We are all in a global market," Trichet said.

"It's absolutely normal when you have a certain amount of money ... you go to other participants and you associate them to you."

Trichet will be succeeded by Italy's Mario Draghi at the head of the ECB on Tuesday.

© 2011 AFP

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