Germany’s Bundesbank still skeptical of bond buys
FRANKFURT, Germany — Germany’s central bank, the Bundesbank, remains skeptical of proposed purchases of government bonds by the European Central Bank.
The German national central bank said in its monthly report Monday that it continues to “critically assess” such purchases and that they would carry “substantial risks.”
ECB president Mario Draghi said Aug. 2 that the bank might make such purchases to lower the high interest yields faced by some governments, if countries first applied for help from the eurozone’s bailout fun. He noted that the Bundesbank was the sole dissenter to the plan.
The Bundesbank has one seat on the ECB’s 23-member governing council, but has added clout because it has considerable public support in Germany.
High borrowing costs on government bonds are threatening to ruin the finances of Spain and Italy.