The European Central Bank will gear up to buy Italian and Spanish bonds on the open market but would only act after euro zone governments have activated bailout funds to do the same, ECB President Mario Draghi said on Thursday.
Draghi indicated that any ECB intervention would start at the earliest in September and would depend on countries in trouble on bond markets making a request and accepting strict conditions and supervision.
He also indicated that German central bank chief Jens Weidmann had expressed reservations about bond-buying and further efforts would be needed to persuade the Bundesbank before a final vote to take action.
At a news conference following the central bank's monthly meeting, Draghi said the bank would consider other "non-standard" measures to rein in the euro zone crisis.
"The Governing Council, within its mandate to maintain price stability over the medium term and in observance of its independence in determining monetary policy, may undertake outright open market operations of a size adequate to reach its objective," Draghi said after the bank kept euro zone interest rates at a record low 0.75 percent.
The bank has already spent 210 billion euros buying bonds under its now dormant Securities Markets Programme (SMP) since May 2010, with limited impact, but Draghi said the new effort would be different in scope and conditionality.
Read more: http://www.reuters.com/article/2012/08/02/us-ecb-rates-decision-idUSBRE8710MQ20120802
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