Trichet calls on EU leaders to implement crisis plans


Click to follow

the european Central Bank yesterday urged eurozone governments to speed up the implementation of new measures agreed as part of the second Greek bailout as it continued to buy Italian and Spanish bonds to soothe the markets.

The ECB moved in to put out the fire around Italian and Spanish debt on Monday, with the EU's bailout fund still lacking the authority to buy government bonds in times of turmoil. The new powers for the European Financial Stability Facility (EFSF) were agreed in tandem with the second Greek rescue in July, but still need to be ratified by the eurozone's members.

Following recent market concerns that approval could take months, the ECB's president, Jean-Claude Trichet, yesterday said leaders needed to hasten the ratification process.

"What we need is for governments to do what we consider to be their job," he said. "What we ask is that all the decisions taken on 21 July are put into effect as quickly as possible."

Until that happens, the ECB is expected to remain active to limit the pressure posed by those looking to sell bonds and drive up borrowing costs for Italy and Spain.

The ECB intervention continued to keep yields down yesterday, though concerns that Germany may be hit if the bond buying programme fails to ease the sovereign debt crisis triggered a rise in the cost of insuring German bonds against a possible default. At one point, it cost more to insure German bonds than their UK equivalents, indicating worries about the debt crisis are from from over.

In another sign of investors' jitters, gold prices continued to rise, touching another record high at $1,778 per ounce in the biggest three-day rally for the safe-haven metal since 2008. The Swiss franc, another favourite destination for investors seeking cover, touched a record high for the third consecutive day against the euro and the US dollar, while the yen rose above 77 per dollar. Both spikes came despite recent attempts in Japan and Switzerland to limit currency appreciation.