BRUSSELS (MNI) – The European Central Bank’s ability to purchase
government bonds to help Spain is constrained by the limits of the EU’s
treaties and the central bank’s price stability mandate, ECB President
Mario Draghi said on Wednesday.
“The SMP (Securities and Markets Programme) is neither eternal nor
infinite,” Draghi said at the European Parliament’s Economics and
Monetary Affairs Committee in Brussels, in response to a question from a
Spanish member.
“We should not forget that the ECB has to act within the limits of
its primary mandate and the treaty. The limits of the treaty prohibit
monetary financing. The primary mandate of the ECB is to maintain
primary stability over the medium term for the whole euro area,” he
added.
“We have to walk this thin but delicate balance,” Draghi said,
arguing that it was essential to preserve the credibility of the ECB,
which is “one of the few things left now.”
“Certainly remarkable progress has been achieved and is being
achieved,” Draghi said of Spain’s efforts to restore fiscal health. “The
whole union is close to Spain and certainly the ECB,” he said.
Asked whether the ECB would offer banks a third round of unlimited
cheap three-year loans, Draghi said that he would “never pre-commit.”
–Brussels Bureau, +324-952-28374; pkoh@marketnews.com
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