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24 October 2012

WSJ: Draghi defends bond-buying programme


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ECB President Mario Draghi launched a vigorous defence of his new bond purchase plan before German lawmakers, seeking to quiet fears over the central bank's expanding role in battling the euro crisis.


Mr Draghi may not have convinced his hard-core critics in the German Parliament, but it is likely that the visit will help reassure ordinary Germans that the ECB takes their concerns seriously.

"The exchange has been very productive, wide-ranging", Mr Draghi said after the meeting. "It's been an important component of confidence-building, trust-building between what the ECB does and how what it does is viewed by German public opinion."

Mr Draghi said the new bond plan was needed to remove "unfounded fears about the future of the euro area…and the only way to do so was to establish a fully credible backstop against disaster scenarios".

Norbert Barthle, the senior conservative on Parliament's influential budget committee, which must approve any future bailouts, called Mr Draghi's performance "very convincing", adding: "That's why we can send the message to German citizens that the inflation fears expressed here and there are unfounded".

Mr Draghi repeatedly stressed three themes: that the bond programme was necessary to smooth fragmented financial markets; that it doesn't violate ECB rules against financing governments; and that it won't divert the central bank's attention from its primary mission to keep prices stable. For now, the greater risk isn't a surge in prices, but rather "falling prices in some euro area countries", he said.

Full article



© Wall Street Journal


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