Trichet verdedigt onafhankelijkheid ECB (en)
European Central Bank President Jean-Claude Trichet i has mounted a vigorous defence of the bank's decision to purchase government bonds, insisting he did not give in to pressure from national politicians.
Shortly after EU finance ministers unveiled a €750 billion financial rescue package in the early hours of Monday morning (10 May), the ECB indicated its intention to start purchasing "public and private debt securities" as part of the co-ordinated relief effort for struggling eurozone states.
"We are fiercely and totally independent. This decision is the decision of the governing council and not the result of any kind of pressure of any sort," the ECB chief said later in the day after a meeting of central bankers at the Bank for International Settlements, Basel, Switzerland.
The central bank has justified its decision to enter into the sovereign debt secondary market as a necessary measure "to ensure depth and liquidity in those market segments which are dysfunctional."
Investors had cited the lack of such a decision at last Thursday's meeting of the ECB's governing board as one of the reasons behind the subsequent plunge in global stock markets the following day.
Despite being in close contact with national governments over the weekend, Mr Trichet said the bank's decision to perform an apparent u-turn was made "taking into account the circumstances to do what we had to do, totally independently of any kind of signalling or suggestion or whatever."
"I told that to the various governments of Europe in the fiercest manner, including when I had a meeting with the heads [on Friday]. That's as clear as that," he said.
The fact that European Commission officials began telling journalists about the bond-purchase move before Mr Trichet's announcement reinforced the idea that external voices played a big role in the decision-making process, however.
Indicating on Monday that purchases were already under way across Europe, Mr Trichet defended the move saying the bank would "sterilize" the liquidity it injects with removals elsewhere, and called on governments to now step up their budget consolidation efforts.
Weber
Some analysts have said the move amounts to a further bail-out of overspending governments, with Mr Trichet conceding that the decision to buy bonds was not taken unanimously.
"On some of the decisions there was unanimity ...and on some there was an overwhelming majority," he told Bloomberg Television in Basel. "On bond purchases we had an overwhelming majority."
German central banker Axel Weber, a top contender to take over from Mr Trichet next year, appears to be one of the bank's council members who may have opposed the move.
"The purchase of government bonds poses significant stability risks and that's why I'm critical toward this part of the ECB council's decision," Mr Weber said in Monday's edition of Germany's Börsen-Zeitung newspaper.
Markets across the globe initially reacted well to the co-ordinated European package, with share, bond and euro currency values soaring. However the rally appeared to fizzle out in Asian markets on Tuesday morning, as investors grew cautious again.
But speaking on behalf of the group of central bankers meeting at the BIS, Mr Trichet said the global recovery was well under way. It is "not only confirmed but has some elements, at a global level, of acceleration," he said.
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