Ευρω-ομόλογα: Το κρίσιμο πεδίο μάχης

http://www.reuters.com/article/2012/08/26/us-ecb-bundesbank-bonds-idUSBRE87P03I20120826


The head of Germany's Bundesbank stepped up his opposition to the European Central Bank's latest moves to battle the euro zone's debt crisis on Sunday, saying that plans to buy bonds risked becoming a drug on which governments would get hooked.

In the latest sign of a deepening rift within the ECB that has worried financial markets, Jens Weidmann warned in an interview in weekly Der Spiegel that the buying program verged on the taboo for the bank of outright financing of governments.

He also hinted he was not alone at the ECB in his concern over the program - in contrast to indications by the bank's President Mario Draghi that Weidmann had been isolated in expressing reservations.

The ECB is being forced to take a greater role in fighting the crisis while governments negotiate legal and political hurdles to coordinating a longer-term response, but the Bundesbank wants to limit the scope of central bank action.

Draghi is expected to detail the bond-buying plan after a September 6 meeting of the bank's 23-member Governing Council.

"Such a policy is for me close to state financing via the printing press," Weidmann told the weekly magazine. "In democracies, it is parliaments and not central banks that should decide on such a comprehensive pooling of risks."

Financing governments has long been a line in the sand for the ECB. Weidmann's predecessor as Bundesbank chief, Axel Weber, quit last year in protest at the ECB's existing, but now dormant, bond-buying scheme - the Securities Markets Programme (SMP).

"We should not underestimate the risk that central bank financing can become addictive like a drug," Weidmann said.

The Bundesbank retains substantial influence within Germany and on financial markets due to its inflation-fighting credentials but, as just one of 17 constituents at the ECB, it is unlikely it could scupper Draghi's plan.
Policymakers are posturing over the programme ahead of their September 6 meeting, at which markets will be looking for the central bank to spell out more details of the plan.

Central bank sources told Reuters on Friday that the ECB is considering setting yield band targets under the new bond-buying programme to allow it to keep its strategy shielded and avoid speculators trying to cash in.
Weidmann said setting such yield band targets was a "sensitive notion" but rejected suggestions that he was isolated on the ECB Governing Council in having such reservations.

"I hardly believe that I am the only one to get stomach ache over this," he said.

ECB DISPUTE

Der Spiegel also reported that there was a dispute within the ECB over the form of the programme, with officials from countries like Spain and Italy pushing for unlimited ECB intervention in secondary bond markets.

ECB officials from northern euro zone countries only want the central bank to intervene in a "short, but energetic" way when bond yields "explode" upwards, the magazine said. Germany's Finance Ministry is concerned the new ECB plan could endanger the bank's independence, Der Spiegel said.

As a condition for ECB support, a country will first have to seek an aid programme from the euro zone's bailout funds. This is subject to approval by finance ministers, and central bankers are worried this makes their action dependent on politicians.

To avert this risk, German finance ministry officials were exploring an option where Spain or Italy would make a commitment on economic reforms to the European Commission - an unelected body - as a condition for ECB support, rather than accepting an aid programme from the bailout funds, Der Spiegel said.

That option would avert the problem of ECB action being linked to decisions taken by governments, thereby protecting the central bank's independence. However, such a commitment to the Commission would be less binding than the terms of a bailout.

Weidmann wanted to "avoid monetary policy coming under the dominance of fiscal policy."

He did not see an immediate inflation threat from the new bond-buying programme, but added: "If monetary policy allows itself to become a comprehensive political problem solver, its real goal risks moving further and further into the background."

Weidmann warned against obligating the ECB "to guarantee keeping member states in the euro zone at any price."

On Greece's position in the bloc, he said it was important that "no further damage to trust in the framework of the currency union arises, and that the economic policy requirements of the aid programme retain their credibility."