ECB could stop buying Italy’s bonds

City A.M. Reporter
THE European Central Bank (ECB) has discussed the possibility of ending the purchase of Italian government bonds if it concludes Italy is not adopting promised reforms, ECB governing council member Yves Mersch has said.

“If we observe that our interventions are undermined by a lack of efforts by national governments then we have to pose ourselves the problem of the incentive effect,” Mersch said, according to extracts of an interview with Italian daily La Stampa published over the weekend. Asked if this meant the ECB would stop buying Italy’s bonds if it did not adopt reforms it has promised to the EU, Mersch, who heads Luxembourg’s central bank, replied: “If the ECB board reaches the conclusion that the conditions that led it to take a decision no longer exist, it is free to change that decision at any moment. We discuss this all the time.”

Since the ECB resumed its bond buying programme around three months ago it has purchased some €100bn (£86bn) of government bonds.