FRANKFURT: The German central bank or Bundesbank hit out Thursday at a new masterplan drawn up by the European Central Bank to help crisis-hit eurozone members struggling under cripplingly high borrowing costs.
At its regular monthly policy meeting, the ECB's governing council agreed on a new programme to bring down countries' borrowing costs by buying up unlimited amounts of their sovereign bonds.
Bundesbank chief Jens Weidmann has never made any secret of his opposition to such measures in the past.
And ECB chief Mario Draghi hinted at a news conference that Weidmann was the only one of the 23 governing council members to vote against the new scheme, called Outright Monetary Transactions or OMTs.
The decision "was not unanimous ... there was one dissenting view," Draghi told reporters, adding: "I will leave you to guess who that was" in an apparent reference to Weidmann.
In a statement later released by the Bundesbank, Weidmann kept up the criticism.
"In the most recent discussions, as before, Bundesbank President Jens Weidmann reiterated his frequently substantiated critical stance towards the purchase of government bonds by the eurosystem," the statement said.
"He regards such purchases as being tantamount to financing governments by printing banknotes. Monetary policy risks being subjugated to fiscal policy."
If the adopted bond-purchasing programme led to member states postponing the necessary reforms, "this will further undermine confidence in the political leaders' crisis-resolution capability," the statement continued.
"This underscores the crucial importance of ensuring both credibility in the promised conditionality and the resolute determination to immediately terminate intervention purchases if the underlying conditionality is no longer assured," it said.
The OMTs will replace the ECB's previous Securities Market Programme or SMP, first launched in May 2010.
The SMP has come under heavy fire, particularly in Germany, for being seen as blurring the lines between monetary policy, which is supposed to be free from all political influence in the euro area, and fiscal policy.
But unlike its forerunner, the SMP, the OMTs are subject to strict conditions and Draghi insisted the ECB is not offering crisis-hit countries a blank cheque.
Countries wishing to benefit from the OMTs would first have to apply for a bailout from one of the eurozone's two rescue funds, the EFSF or ESM.
And any such cash from those funds is conditional on governments meeting agreed reform targets.
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