European Central Bank president Mario Draghi made a robust defence of his bond-buying plan to ease the euro zone's debt crisis, telling German lawmakers their fears of illegal funding of governments or stoking inflation are misplaced.
Mr Draghi today entered the lion's den of the Bundestag lower house for a two-hour grilling behind closed doors on the ECB's Outright Monetary Transactions (OMT) programme, which the German central bank has denounced as tantamount to printing money to finance governments.
Rebutting the main objections point by point, Mr Draghi said, according to an opening statement released by the ECB: "First, OMTs will not lead to disguised financing of governments.”
"Second, OMTs will not compromise the independence of the ECB... Third, OMTs will not create excessive risks for euro area taxpayers... Fourth, OMTs will not lead to inflation."
The rare appearance in a national legislature underscored how important it is for
Mr Draghi to keep politicians in Europe's biggest economy on-side amid a broader German backlash.
The Italian ECB chief addressed a joint session of the parliamentary budget, European and foreign affairs committees on a day when business surveys suggested Germany is being sucked into the euro zone's economic malaise.
Unveiled in early September, the ECB bond-buying programme aims to support troubled euro zone states such as Spain by reducing their borrowing costs, provided they request aid and submit to strict policy conditions and monitoring.
Even though it has not yet been implemented, the policy has already helped ease the euro zone's crippling three-year crisis, but German critics say it violates an ECB taboo on financing governments, taking the bank into dangerous new territory.
Reuters
