Germany’s Bundesbank stepped up its criticism of the European Central Bank’s plan to embark on potentially “unlimited” government bond purchases, widening a rift over how to tackle the sovereign debt crisis.
“The Bundesbank holds to the opinion that government bond purchases by the Eurosystem are to be seen critically and entail significant stability risks,” the Frankfurt-based central bank said in its monthly report today. The new program “could be unlimited” and decisions about potentially far greater sharing of solvency risks should be taken by governments or parliaments, not by central banks, it said.
Italian and Spanish bonds rose after the Spiegel report. The yield on Spain’s 10-year government bond fell 24 basis points to 6.18 percent as of 1 p.m. in Madrid, while the yield on Italian 10-year bonds was 5.73 percent, down 4 basis points.
“Nobody should try to create the impression that the Bundesbank or its president are isolated,” German ECB Executive Board member Joerg Asmussen told the Frankfurter Rundschau in today’s edition.