ECB ‘stretched’ as buyer of last resort, says finance chief

THE European Central Bank is “being stretched” in its current role as buyer of last resort for European sovereign debt, the head of a global association of financial institutions has said.

Charles Dallara, managing director of the Institute of International Finance, said the ECB’s burden will be eased in late September or early October, when governments approve changes to the euro rescue fund. Eurozone leaders last month announced plans to allow the European Financial Stability Facility to buy bonds on the secondary market.

“Ultimately the burden on the ECB is going to need to be eased by some degree of fiscal integration and fiscal consolidation,” Mr Dallara said. Governments should look beyond current proposals, such as a proposed financial transaction tax, which he called “very questionable.”