The FINANCIAL -- The Bundesbank,
Germany's central bank, remains opposed to a hotly contested programme
of bond purchases by the European Central Bank , a spokesman said on
Friday.
"Our opinion regarding the SMP programme has not changed," the spokesman told AFP, referring to a programme for buying up the sovereign bonds of debt-wracked eurozone countries that are finding it difficult to drum up financing in capital markets.
As EUbusiness reported, the ECB first launched its bond-buying blitz under the Securities Market Programme (SMP) in 2010 and the move was criticised by the Bundesbank from the start, even leading its then chief Axel Weber to resign.
Bundesbank officials argue the programme is tantamount to so-called monetary financing, where the central bank effectively prints money to pay off a country's debt, something which is expressly forbidden under the ECB's statutes.
The SMP has lain virtually dormant since February following the ECB's moves to pump more than one trillion euros ($1.22 trillion) into the banking system via three-year funding operations in December and February.
But ECB Mario Draghi hinted at a possible reactivation of the programme in comments on Thursday, where he said the central bank was "ready to do whatever it takes to preserve the euro. And believe me it will be enough".
The ECB's governing council is scheduled to hold its next regular monthly policy meeting next Thursday and many observers suggested a resumption of the SMP could be on the cards.
At the same time, the Bundesbank saw as "unproblematic" the possibility that the eurozone's bailout fund, the EFSF, could purchase the debt, because the EFSF "is not a central bank," the spokesman said.
Nevertheless, the German central bank would be opposed to awarding a banking licence to either the EFSF, which is a temporary mechanism, or its successor the ESM. A banking licence would allow the bailout funds to borrow money from the ECB.
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