BRUSSELS (MNI) – The European Central Bank is acting at the limit
of its mandate by buying Eurozone government bonds, BusinessEurope,
which speaks on behalf of more than 40 business and industry groups
across the European Union, said on Monday.
The European Central Bank – which has a mandate to keep inflation
below, but close to 2% – came under fire from many quarters after it
announced last month is would buy sovereign debt of Eurozone countries
in a bid to stave off the sovereign debt crisis, which was driving the
yields of many Euro-using countries’ debt sky high.
The move was part of a wider package of measures employed by
Eurozone countries, including the setting up of a E750 billion emergency
fund, but critics say the ECB’s credibility and independence was
compromised by the move.
In a document released Monday, BusinessEurope, a European Union
business lobby group, called for Eurozone governments to set up a
permanent crisis resolution mechanism.
“This system should protect the ECB from compromising its
independence in order to safeguard financial stability in the event of a
sovereign debt crisis,” the lobby group said.
“In particular, situations where the ECB feels compelled to engage
in the outright purchase of government debt should be avoided,” it said.
The current situation facing the ECB is “the limit of its mandate,”
BusinessEurope’s chief economist Mark Stocker said. “We should make sure
that in the future the ECB is not put in a similar situation.”
“The mandate of the ECB, the statute, is very clear,” he added.
But he said the ECB’s credibility hasn’t suffered so far, because
it was so high going into the crisis.
“We don’t think that the credibility of the ECB has been dented,”
he said. “It is very important that we preserve this.”
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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