BERLIN: Angela Merkel’s party’s senior member warned the European Central Bank not to pour money into Greece and other struggling euro zone states through bond purchases, saying this would reduce pressure on them to pass much needed reforms.
Michael Fuchs, deputy parliamentary floor leader of the German chancellor’s Christian Democrats (CDU), said we should not pump extra money into these states, but rather make sure they continue along the reform path.
ECB President Mario Draghi urged politicians to implement necessary reforms, reduce tax burdens and cut red tape to support a fragile euro zone recovery.
He also said the risk of the central bank not fulfilling its price stability mandate was higher now than half a year ago, and reiterated its readiness to act soon if needed, with government bond purchases among the tools it could use.
With the euro zone flirting with deflation, financial markets interpreted Draghi’s comments on Friday as strongly suggesting the ECB would soon embark on outright money-printing, and the euro sank to a 4-1/2 year low against the dollar.