Draghi ignores calls for ECB to step into breach

Bank chief insists focus should be on eurozone leaders' delay in beefing up role of bailout fund

Mario Draghi, president of the European Central Bank, ignored calls for his institution to play a greater role in resolving the eurozone sovereign debt crisis yesterday and instead asked why European governments have not yet delivered on their own commitments.

Referring to last month's agreement by eurozone leaders to increase the powers of the single currency bloc's €440bn (£378bn) European Financial Stability Facility bailout fund, he asked: "Where is the implementation of these long-standing decisions?"

Mr Draghi, speaking at a European banking conference in Frankfurt, argued the primary purpose of the ECB was to safeguard price stability, implying that unorthodox measures such as pledging to backstop individual governments would jeopardise that goal. He said: "Gaining credibility is a long and laborious process... but losing credibility can happen quickly."

Jens Weidmann, head of Germany's Bundesbank and an ECB governing board member, was more explicit than Mr Draghi in rejecting demands for the central bank to play a greater role.

Mr Weidmann told the Frankfurt conference: "The lack of success in containing the crisis does not justify overstretching the mandate of the central bank and making it responsible for solving the crisis."

This message was echoed by another ECB board member, Jose Manuel Gonzalez-Paramo, who – speaking in Spain – argued: "The sovereign debt crisis is primarily the responsibility of governments."

The strongest pressure on the ECB to play a greater role in the crisis has come from the French government, which proposed that the central bank should lend to the EFSF.

Other governments have called for the ECB simply to commit to buying up the bonds of European states in whatever quantities are needed to allow them to borrow at sustainable rates.

The German government of Angela Merkel has blocked both proposals. Earlier this week, Ms Merkel said: "If politicians think the ECB can solve the euro crisis, then they are mistaken".

The ECB has bought about €187bn in eurozone sovereign bonds since the crisis began last May in an attempt to stabilise bond markets. And there have been reports of it buying Italian bonds (which have come under unprecedented pressure) over the past week. But the ECB has always stressed the temporary nature of this programme and it is eager for the eurozone bailout fund to take over this stabilisation role. The yield on Italian 10-year bond yields fell to 6.7 per cent yesterday and the rate on equivalent Spanish sovereign debt fell to 6.4 per cent.

However, earlier this week Madrid had to pay almost 7 per cent at an auction of 10-year bonds, which is close to levels that saw other eurozone nations forced to seek external bailouts.

And fear remains elevated among debt market investors. Josef Ackermann, chief executive of Deutsche Bank, admitted to the Frankfurt conference that banks are still experiencing a difficulties borrowing on the capital markets.

He said: "Short-term financing is fine, but the big question is how we can ensure long-term funding. The willingness of investors to make long-term investments in banks is not very pronounced."

The Greek finance minister, Evangelos Venizelos, added his voice to those calling for Mr Draghi to intervene more in the crisis. He said: "The ECB, like every central bank, must help the eurozone overcome the crisis, in every possible way."

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee