ECB fights calls for more crisis action, cites independence

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European Central Bank chief Mario Draghi stood firm on Friday against heavy pressure to come to the rescue of the eurozone, standing by the bank's independence and anti-inflation duty.

Draghi, new in his job, hit back by telling governments they had a duty to get their finances in order and enact agreed measures to stabilise the crisis-wracked eurozone.

Pressuring the ECB to act would undermine the bank's credibility, Draghi warned.

In the current environment, the "continuity, consistency and credibility" of the ECB and its monetary policy were "essential", the Italian central banker said.

"Credibility implies that our monetary policy is successful in anchoring inflation expectations over the medium and longer term.

"This is the major contribution we can make in support of sustainable growth, employment creation and financial stability," Draghi said in a speech to the European Banking Congress here.

"And we are making this contribution in full independence."

There is growing pressure from political and market circles for the ECB to ramp up hugely its purchases of debt issued by governments in trouble to relieve upward pressure on borrowing rates and the threat that devalued government bonds could cause severe strains in the banking sector.

It was in the hands of the politicians to solve the debt crisis, Draghi insisted.

"National economic policies are equally responsible for restoring and maintaining financial stability," he said.

"Solid public finances and structural reforms -- which lay the basis for competitiveness, sustainable growth and job creation -- are two of the essential elements."

And a third essential element for financial stability was "a much more robust economic governance of the union going forward," he said, calling for "urgent implementation" of the recent decisions taken by the European Council and the EU summit.

Draghi complained that it was now 18 months since EU leaders agreed to set up the European Financial Stability Facility or EFSF as a bailout fund for debt-stricken countries.

It was also four months since EU leaders had finally decided to make the full EFSF guarantee volume available.

"And we are four weeks after the summit that agreed on leveraging of the resources by a factor of up to four or five and that declared the EFSF would be fully operational," Draghi said.

"Where is the implementation of these long-standing decisions? We should not be waiting any longer," Draghi said.

© 2011 AFP

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