ECB in bid to protect euro

ensure that the liquidity created by the ECB reaches businesses and households.”
After next week’s regular monthly monetary policy meeting, ECB chief Mario Draghi is expected to detail under what conditions the central bank would intervene massively in bond markets to help struggling eurozone states.
Coeure reiterated that help would only come for countries under a formal adjustment programme as part of rescue from Europe’s bailout funds, and that the ECB was looking more towards buying short-term government debt.
Germany’s Bundesbank is firmly opposed to any resumption of ECB government bond buying, which it considers tantamount to financing government spending, which the central bank is prohibited from doing.
However, Draghi said in an article earlier this week the bond-buying programme and other special emergency measures were justified by the current exceptional circumstances.
Coeure pledged the ECB would do “everything which is possible under its mandate to protect the integrity of the euro.”
He warned the eurozone was no longer a single capital market.
“We are seeing advanced indications of a fracturing of the single market for capital in Europe,” he told a business conference.
“We have the euro but we no longer have the free circulation of capital,” adding “it is very important that banks continue to lend beyond their borders.”
Eurozone banks have cut back lending in general in recent months, but more sharply outside their home markets.
“The biggest risk for the euro is not financial speculation . . . but the lack of confidence in the euro,” said Coeure. — AFP.