ECB member hits out at governments

EUROZONE governments must take responsibility for restoring investor confidence in their public finances, according to European Central Bank governing council member Luc Coene.

“The action taken by the ECB has worked relatively well,” Coene said, adding that “for the rest, it is up to countries and governments to take the necessary measures”.

It has never been the central bank’s objective to “find a solution to the structural problems facing public finances”, he said.

Crisis measures adopted by the ECB, such as buying some eurozone governments’ bonds on the secondary market and providing banks with easier access to central-bank liquidity, have “given a bit of oxygen to financial markets”, he said.

Coene said it is “difficult to say” if the ECB’s bond-buying programme exceeded the central bank’s mandate. “It is a very contested issue,” he said.

Spanish and Italian bonds rose last week, pushing 10-year yields for both down by the most since the euro was launched, after the ECB bought the securities in a bid to stabilise markets.

The ECB started buying Italian and Spanish securities on August 8, in response to concerns the European debt crisis could be spreading.

The proposed creation of eurobonds — pooled borrowing on behalf of the eurozone states — “could lead to more coherent financing of budgets”, Coene claimed. “But it would also be necessary to create a mechanism to ensure that countries with larger debts pay more.”

A ban on short-selling of some financial stocks introduced yesterday by Belgium’s Financial Services and Markets Authority was a good move in the “short term”, Coene, who is also Belgium’s central bank chief, told L’Echo.

“We should not have any illusions — in the long term, it’s not a panacea.”