The European Central Bank is determined to bring down the excessive borrowing costs hurting Spain and Italy and should be ready to intervene decisively in bond markets very soon, ECB governing council member Christian Noyer said on Thursday. Noyer, governor of the Bank of France, said the ECB's 23-member governing council strongly backed last week's decision to intervene in markets, glossing over the dissenting voice of powerful Bundesbank Governor Jens Weidmann, which disappointed investors.
"Don't have any doubt about the determination of the governing council and its capacity to act within the terms of its mandate," Noyer told Le Point magazine in an interview. "Our operations will be of sufficient size to have a strong impact on the markets. We should be ready to intervene very soon, prioritising short-term debt markets," he added.
ECB President Mario Draghi had indicated last week that the bank would not be ready to enter the market before September and only if governments activated the euro zone's bail-out funds to join the ECB in bond buying.
Noyer ruled out any action by the ECB on the primary debt market - which would be akin to monetary financing of governments' deficits - but said an intervention in the secondary market was "perfectly possible". "There is no divergence between the French, Germans and the Commission on this. They all say the same thing: we are not opposed to ECB intervention to correct market anomalies." Noyer said the mandate of the ECB explicitly included protecting the solidity of the euro zone. "An exit of Greece from the euro zone is not something which we envisage," he said. "There is no plan to prepare for the exit of any country from the euro zone."
Comments
Comments are closed.