PARIS (MNI) – European Central Bank President Jean-Claude Trichet
declined Tuesday to specify a limit in size or time to the bank’s
purchases of sovereign debt in the secondary market, insisting instead
on the need to restore confidence in fiscal policy.
The controversial bond-buying strategy aims at “re-establishing a
more normal functioning of markets, so that our own monetary policy is
transmitted to all economies” of the Eurozone, Trichet explained in a
radio interview, rejecting any extension to primary sovereign debt
purchases.
“We are in the secondary market,” he said, reminding that this
“non-conventional measure” was first implemented in May 2010.
Trichet linked the action to the ECB’s “extremely clear” demands on
the governments of Italy and Spain to accelerate the consolidation of
public finances and on all governments to implement “as fast as
possible” their decisions from July 21 related to the second bailout
program for Greece.
“Governments must do their work,” he stressed.
The decision to reactivate the bond-buying program was “absolutely
not negotiated” with Eurozone leaders, he said, reminding that the ECB
is “fiercely independent”.
The latest tensions in financial markets cannot be attributed
solely to the downgrade of the US credit rating by Standard and Poor’s,
but rather to a “multitude of factors”, Trichet said.
“In general, we have a problem of confidence in the global economy”
that dates back to 2007 with the explosion of the sub-primes crisis, he
explained.
The ECB aims to be an “anchor of confidence” by assuring price
stability, which is “extremely important” for confidence, he said. But
“serious” budget policies are “essential” as well.
The confidence of households, of banks and of investors is a
precondition for economic growth, Trichet reiterated.
–Paris newsroom +331 4271 5540; Email: stephen@marketnews.com.
[TOPICS: M$F$$$,M$X$$$,M$$EC$,M$$CR$,MT$$$$,MGX$$$]
