THE EUROPEAN Central Bank (ECB) will only buy government debt to save the Eurozone, not to save a nation which has borrowed too much, ECB president Mario Draghi said yesterday.
It came as his flagship Outright Monetary Transactions (OMT) policy is being taken before the German constitutional court over concerns the ECB is breaching its mandate.
Germany has been cautious of any policy that could leave its taxpayers on the hook for other governments’ obligations.
But Draghi said Germany has nothing to fear from the OMT.
“We will not intervene to generally ensure the solvency of a country,” he said in a radio interview. “German taxpayers’ risk is today significantly lower than a year ago.”
Any country benefiting from the OMT would have to sign up to a tough programme of economic reforms, emulating those made by Germany a decade ago.