‘ECB can tackle symptoms but not cure crisis’

“The situation in the financial markets has reached a turning point, but recent market developments have highlighted that it remains fragile,” Coeure said in a speech.
After three months of relative calm, the sovereign debt crisis returned with a vengeance this week, with stock markets plunging and bond yields in Spain and Italy jumping as doubts grow over the countries’ ability to control their finances.
Coeure said the rise in the Spanish yields did not reflect Spain’s economic fundamentals.
Coeure also said that there was no reason why the situation should not normalise since there was the political will in Madrid to resolve the crisis.
Asked whether the ECB would make use of its bond-buying programme to help bring down Spanish yields, Coeure refused to comment, saying simply that while the so-called Securities Markets Progamme had not been used recently, it was still in place.
Amid signs of acute tension, there have been calls for the ECB to come to the rescue.
The ECB has acted as firefighter from the very beginning of the crisis, taking a series of what it calls “non-standard” measures to prevent a collapse of the single currency.
Those measures were working, Coeure insisted.
“The actions of the ECB have helped to break (a vicious) cycle and to bring confidence back into the euro area financial system,” he said.
The bank has ruled out winding down its anti-crisis measures for now, but insists it is up to governments to tackle the root causes and get their finances in order. — AFP.