Investors continue to debate the importance of European Central Bank President Mario Draghi’s promises to “do whatever it takes” to save the euro.
In particular, he hinted that new crisis-averting measures were coming from the ECB, in conjunction with important decisions by EU leaders.
But revelations that a full seven members of the ECB’s 23-member Governing Council did not immediately agree with Draghi’s bond-buying program suggest that the central banker could have difficulty actually implementing his policies.
The latest sign that discontent is brewing at the ECB comes from Belgian central banker Luc Coene, who told newspapers De Tijd and L’Echo:
“It makes no sense for the ECB to start financing those countries…It would only lead to the ECB taking on the whole public debt of Spain and Italy onto its balance sheet. That would in turn weaken the ECB and do nothing to resolve the underlying problems…
“We all agree specific conditions must be met before we can intervene. About those conditions, the ECB board members do have different opinions from time to time.”
Admittedly, this statement taken alone misconstrues the broader content of Coene’s interview. He went on to qualify that it is important for the ECB to keep market pressure on EU leaders in order to make them act. So it would seem that Coene doesn’t completely oppose the idea of ECB bond purchases.
Nonetheless, he said, ECB bond purchases would only have a “short-lived effect,” and that market angst “will stop only when there’s no more Spanish and Italian bonds in the market.”
While Coene’s comments still suggest that moves are coming from the ECB, he came off as unconvinced that these measures will really do anything. Thus, it’s wise to doubt the real power behind what some had hoped was to be an ECB “bazooka.”
What’s more, Coene’s comments confirm that disagreement is rife at the ECB. While such opposition seems to be coming from a minority of Governing Council members, doubtful comments such as Coene’s will likely diminish the symbolic effect of any ECB action as marking any kind of turning point in the crisis.
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