FRANKFURT (MNI) – The European Central Bank’s government bond buys
are a violation of the Maastricht Treaty, Bundesbank board member
Carl-Ludwig Thiele said Monday.
Thiele’s comments depart form the official Bundesbank line. While
the German central bank has warned that larger purchases may be illegal,
it has said that current purchases do not violate the prohibition of
monetary financing.
Thiele recalled that the decision to buy Greek government bonds had
found no support from German ECB Governing Council members. “Germany was
over-ruled on the Council,” Thiele said.
“These buys were a violation against the prohibition of monetary
financing, that is the basic principle that a central bank should not
give credit to a state,” Thiele said in a speech text provided by the
Bundesbank.
Thiele also appeared to argue that the ECB does not actually buy
government bonds of Spain and Italy to ensure the monetary transmission
mechanism, as the bank always asserts, but simply to lower the borrowing
costs for Madrid and Rome.
The decision to buy Italian and Spanish bonds “in my view, was
taken because the majority of the ECB [Council] thought interest rates
of these countries too high,” Thiele said.
Thiele also said that the idea that the current crisis could be
overcome by throwing on the printing press should finally be discarded.
“This would only endanger the most important basis for a stable
currency: the independence of a price stability orientated central
bank,” he said.
–Frankfurt bureau tel.: +49-69-720142. Email: jtreeck@marketnews.com
[TOPICS: M$X$$$,M$G$$$,M$$EC$,,M$$CR$]
