FRANKFURT (MNI) – The Bundesbank on Monday reiterated its objection
to new government bond purchases by the European Central Bank and called
for strict conditionality on any new bailout loans.
“The Bundesbank maintains its view that government bond buys in
particular should be assessed critically and that they come with
significant risks for stability policies,” The Bundesbank warned in its
monthly report.
“Decisions regarding yet more pronounced pooling of solvency risks
should be made through fiscal policies – that is, governments and
parliaments – and should not be carried out via the central bank balance
sheets,” the Bundesbank said.
The German central bank warned against further weakening of
conditionality on aid provided by the Eurozone’s bailout funds, the
European Financial Stability Facility and the European Stability
Mechanism.
Additional interest rate charges on bailout loans and strict
economic and fiscal policy conditions are key to maintaining incentives
for bailout countries to quickly adjust and secure a return to capital
markets, the report said.
“In this context the tendency towards weakening conditionality is
alarming,” the Bundesbank warned.
–Frankfurt bureau; +49-69-720142; jtreeck@mni-news.com
[TOPICS: MGX$$$,MT$$$$,M$$CR$,M$X$$$,M$G$$$,M$F$$$,M$$EC$]
