The European Central Bank has unveiled an emergency bond-buying program aimed at helping bring down high borrowing costs for debt-laden eurozone members. But "strict conditions" are attached to the aid.
ECB President Mario Draghi said the program - termed Outright Monetary Transactions - would have no set limit and be a "fully effective backstop" to prevent borrowing costs from rising.
In addition, Draghi indicated that the ECB would target government debt with relatively short maturities, presumably between two to three years.
"There was one dissenting view," Draghi told reporters, adding: "I will leave you to guess who that was."
The dissent came in a a statement later released by Germany's main financial organ: "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. He regards such purchases as being tantamount to financing governments by printing banknotes. Monetary policy risks being subjugated to fiscal policy."
The ECB would only consider buying the debt, Draghi added, if countries seeking ECB help would first officially ask for help from Europe's bailout funds and agree to "strict and effective" budget policy conditions.
Since 2010, the ECB has stepped in from time to time to buy bonds of countries that have found themselves under heavy market pressure, leading to soaring borrowing costs. The bank is now said to have 209 billion ($262.7 billion) of government bonds on its books.
The move has faced criticism, notably from Germany, as ECB bond purchases were seen as tantamount to monetary state financing, which is forbidden under the ECB's statutes because it is seen as sparking inflation.
Draghi said, however, that the ECB's new effort was "within its mandate"
uhe / mkg (dpa, Reuters, AFP)