FRANKFURT — Germany’s central bank Monday reaffirmed its opposition to the European Central Bank purchasing government bonds on the secondary market, dashing hopes that it might hold back criticism on the program. The comments also appear to put the bank in conflict with the German government.
“Our stance (on bond purchases) hasn’t changed,” a bank spokesman told Dow Jones Newswires.
The comment comes days after ECB president Mario Draghi said it was prepared to restart its program of buying euro-zone government bonds on the secondary market if troubled states applied for assistance from the euro zone’s bailout funds.
Bundesbank president Jens Weidmann opposes the purchases of government bonds on the secondary market, because he sees it as a redistribution of wealth among states that has not been democratically authorized. He has also stated that it is up to governments to solve the debt crisis that is ravaging the euro zone’s economy and not the central bank.
Monday’s announcement is a reaffirmation of a previous position, but shows that the Bundesbank will not sit by idly if it feels the ECB is stepping beyond its 2 mandate of strictly keeping inflation under control.
At the ECB’s monthly news conference Thursday, Draghi singled out Weidmann as having opposed the strategy.
“It’s clear and it’s known that Weidmann and the Bundesbank have their reservations about programs that envisage buying bonds,” Draghi said.
