European Central Bank President Mario Draghi damped expectations that the bank will step up bond purchases to tame the sovereign debt crisis, saying it can’t overstep its mandate.
“People have to accept that we have to, and always will, act in accordance with our mandate and within our legal foundations,” Draghi told the Financial Times in an interview, confirmed by the Frankfurt-based ECB. “The important thing is to restore the trust of the people -- citizens as well as investors -- in our continent. We won’t achieve that by destroying the credibility of the ECB.”
The ECB is resisting pressure to increase its bond buying, saying governments need to find a lasting solution to the debt crisis. The central bank has instead focused on helping the banking sector and will this week offer financial institutions in the 17-nation euro area unlimited three-year loans. Draghi said it’s up to banks to decide what to do with the money.
“One of the things that they may do is to buy sovereign bonds,” he said. “But it is just one. And it is obviously not at all an equivalent to the ECB stepping-up bond buying. One aspiration is to have them financing the real economy, especially small- and medium-sized enterprises.”
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