European Central Bank President Mario Draghi
stepped up his campaign Wednesday to secure German support for the
bank's debt crisis plan by telling lawmakers in Berlin the ECB's
bond-buying scheme would help remove fears about the euro.
The ECB chief's appearance before a joint meeting of three German
parliamentary committees was aimed at setting out the Frankfurt-based
bank's case for its unlimited government bond-buying programme, seen
as key by many experts to keeping the eurozone whole.
In his opening statement, Draghi said the plan would not fuel
inflation or "compromise the independence of the ECB."
He said the bond-buying scheme did not represent a move by the
central bank to help finance governments. Nor, Draghi said, would it
result in excessive risks for eurozone taxpayers.
"In our view, to restore the proper transmission of monetary
policy ... unfounded fears about the future of the euro area had to
be removed," the ECB chief said.
"The only way to do so was to establish a fully credible backstop
against disaster scenarios," Draghi said.
Draghi's meeting with members of the budget, European and finance
panels - which have to review Germany's response to the crisis - was
being held behind closed doors.
The ECB chief is also likely to face questions from
parliamentarians on the economic crisis gripping Greece.
While Draghi was speaking to German lawmakers in Berlin, Greek
Finance Minister Yannis Stournaras said in Athens his country had
been granted a two-year extension to meet the terms of its
international bailout programme.
The government in Athens has been locked in talks with the
European Commission, the European Central Bank and the International
Monetary Fund (IMF) over a 13.5-billion-euro (17.4-billion-dollar)
package of austerity measures for the next two years.
However, earlier in the day, ECB executive board member Joerg
Asmussen told the German public broadcaster ARD that an agreement on
such an extension had not been reached.
Draghi's appearance before the committees follows a series of
media interviews and speeches by Draghi in Germany aimed at winning
over sceptics in the country, the main contributor to Europe's
efforts to end the long-running debt crisis.
In his opening remarks, Draghi increased the pressure on European
governments to clean up their state finances.
"It is governments that must set right their public finances," he
said. "It is governments that must reform their economies."
Underlying the growing tensions facing the eurozone, the
committees' session in Berlin was held against the backdrop of new
data from two key surveys showing deepening economic gloom across the
17-member currency bloc.
While the Munich-based Ifo institute said German business
confidence slumped to its lowest level in 32 months in October, the
London-based Markit economic research group's purchasing managers'
index painted a bleak economic outlook for the currency bloc.
Markit's preliminary PMI showed economic output in the eurozone
sliding deeper into recessionary territory during October.
Adding to the downbeat picture, US auto group Ford said it wants
to close a factory in Belgium, while the French government unveiled a
rescue package for ailing national carmaker, PSA Peugeot Citroen.
Since Draghi set out the ECB's plan last month, criticism has
emerged across Germany's political and economic establishment.
The nation's widely circulated Bild newspaper last month said the
ECB programme was akin to writing a "blank cheque" for the heavily
indebted eurozone states.
The ECB's new bond-buying programme is to be activated only when
nations applying for support meet tough conditions laid down by
European bailout funds.
But this has failed to convince Germany's central bank, the
Bundesbank, which has spearheaded the opposition to the programme by
arguing that unlimited bond-buying risks undercutting the ECB's
independence by blurring monetary and fiscal policy, and also
boosting inflation.
This is despite German Chancellor Angela Merkel backing the ECB
plan, which is known as Outright Monetary Transactions.
Debt-hit Spain is next month expected to become the first eurozone
state to apply for aid under the ECB bond-buying acquisition plan.
In the meantime, pressures have eased on Italian and Spanish
borrowing costs since Draghi unveiled the bank's plans, as investor
confidence in Europe's efforts to end the euro debt crisis have
increased.
