|
|
Merkel ends her summer vacation and travels to Canada on August 15-16 for talks with Prime Minister Stephen Harper, as a spiralling euro crisis threatens to constrain the global economy. With the region’s leaders awaiting a German high court decision on bailout funding next month, they’re struggling to smooth divisions over a European Central Bank plan to buy the bonds of indebted nations.
The ECB said last week that it would undertake bond purchases only if troubled nations promise measures to improve their economic health. [ECB Governing Council member] Coene, who also heads Belgium’s central bank, told two Belgian newspapers that ECB officials are divided on what conditions should be agreed. The policymaker said the central bank’s experience a year ago demonstrates why the ECB is reluctant to step in. “We haven’t forgotten what happened in August of last year: We bought Italian bonds and right after that the Italian government reneged on its pledges", Coene was quoted as saying. “The conclusion is clear: When you take away the market pressure, you take away the pressure on politicians to act.”
ECB purchases won’t return investor confidence in Spain and Italy, he said, attributing the rise in bond yields to a lack of trust in those countries to repair their economies.