ECB: Governments must end doubts

THE European Central Bank cannot intervene much more aggressively to tackle the eurozone debt crisis, three ECB policymakers from the bloc’s core said yesterday, putting the onus on governments to act instead.

The ECB is under pressure from world leaders to do more to address the crisis, which has engulfed Italy and been exacerbated by the prospect of a political vacuum after Italian Prime Minister Silvio Berlusconi’s impending departure.

Dutch central bank president Klaas Knot, a member of the ECB’s policymaking governing council, led fresh ECB resistance.

“We have gone pretty far in what we can do but there is not much more that can be expected from us,” he told the Dutch parliament.

“It is now up to the governments ... [to] make sure the doubts about sustainability, about repayment of government debt are removed as quickly as possible.”

His comments echoed a warning to European governments from German ECB policymaker Jürgen Stark late on Wednesday not to rely on the bank’s help.

Italian 10-year bond yields have shot past 7% despite ECB buying of the country’s bonds, making it clear that a bigger response is required.

For now, with no agreement on how to scale-up the eurozone’s rescue fund, the ECB is the only plausible defender.

A eurozone official said the bloc was not making any plans to bail out Italy, which is deemed too big to save with the €440bn European Financial Stability Facility.