ECB boss Draghi also said the rate-setters would not use the outright monetary transactions (OMT) bond-buying programme unless Spain had already been bailed out by the European Stability Mechanism (ESM) aid fund.
“The ECB can only consider OMTs if there are major problems in the transmission of monetary policy and if there is a strict and effective conditionality attached to an appropriate ESM programme,” Draghi told Spanish politicians.
Analysts said these comments meant the scheme was really being relegated to a minor role for use only in extreme circumstances. “I think Draghi’s speech in Madrid makes really clear that the OMT is only a panic-prevention tool,” said Berenberg Bank’s Christian Schulz. “It’s a backstop against destructive speculation, not a subsidy to government financing.”
Draghi had come to Spain in order to hit back at German critics of his flagship OMT policy – which include the Bundesbank.
But Spanish Prime Minister Mariano Rajoy said he had no plans to request the bailout necessary to trigger bond-buying from the ECB. His position has been made much easier by the steady easing in Spanish bond yields, which sees them close to 5.5 per cent, from nearly seven per cent last September, before the OMT programme was announced.
This came as a poll revealed Rajoy’s centre-right People’s Party (PP) had less popular support than at any time in the past 20 years. The Sigma Dos poll in El Mundo newspaper gave PP just 33.5 per cent of the vote – down from the 44.6 per cent they garnered in the November 2011 election that saw Rajoy take power. However PP still enjoyed a substantial lead over the main opposition party, the Socialists, who polled just 28.2 per cent.