ECB VIEWPOINT:EUROPEAN CENTRAL Bank president Mario Draghi has criticised the "schizoid" political expectations of the Frankfurt institution to stabilise markets through bond-buying.
The Italian economist used his first press conference as ECB head to reassert the bank’s political independence and reject as “pointless” calls for it to intervene further in markets or become a lender of last resort. His knock-back came a day after Minister for Finance Michael Noonan called for the Frankfurt bank to stabilise markets by making a “wall of money” available to buy sovereign bonds.
“There is a strange schizoid attitude: on one hand people say our balance sheet is at risk [from bond-buying], others say we should expand the balance sheet to help everybody,” he said, insisting that the bank’s balance sheet “is not at risk”.
Mr Draghi declined to respond at length to questions on the Greek situation. He said it was “hard to comment on the political situation that is fast evolving” and that he was not attending the G20 summit in Cannes to participate in the Greek crisis talks.
He dismissed renewed speculation yesterday about a possible exit of Greece from the euro zone, saying no legal basis existed in European treaties for such a move. “It’s not in the treaty and we are all bound by the treaty,” he said. “We can’t really conceive of situations not envisioned in the treaty.”
Pressed on the matter, he denied he was giving a “legalistic” non-answer. Considering the ECB’s remit was enshrined in the treaties, he said the crisis – when the “power of the treaties” is called into question – is the most important time to adhere to the treaties as the reference point for all euro zone activity.
Echoing his predecessor, Mr Draghi said the solution to the euro zone crisis lay in responsible national economic policy. He refused to be drawn on how much longer the bank would buy up sovereign bonds to control market spreads.
“It’s clearly pointless to think that sovereign bond rates could be stably brought down for a protracted period of time by external interventions,” he said.
He gave a withering response when asked whether, to stabilise the euro zone, the ECB should become a lender of last resort.
“What makes you think that to become lender of last resort is the thing you need to keep the euro zone together?” he said, turning the question back on the assembled journalists. “I don’t think that is the remit of the ECB.”