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ECB seeing results from bond buying

Friday, September 14 07:51:04

Europe is seeing "positive results" from the ECB's announcement that it stands ready to buy unlimited amounts of bonds issued by euro zone states. ECB President Mario Draghi made his comments in a German paper today. But he conceded he still had work to do to convince some in Germany and could address lawmakers there.

Draghi announced last week that the ECB was ready to buy the bonds of euro zone states struggling with soaring borrowing costs provided they put in a formal request for aid and fulfilled strict domestic policy conditions. "There have already been positive results," he was quoted as saying in Friday's edition of the Sueddeutsche Zeitung. "The announcement of the facility has contributed to raising confidence in the euro area, and in the euro across the world," he said. "Fund managers are bringing their money back to Europe. This is good for the euro area economy," he said.

Spanish 10-year bond yields have fallen from 7.64pc on July 24 to 5.62pc yesterday. Italy's yields fell from 6.6pc on July 24 to 5.03pc yesterday. However, Draghi said the response to his plan was negative in parts of Germany but also in parts of southern Europe, because of the strict conditions. "The rest of the world complimented us," he was quoted as saying. Some in Germany fear it is exposing taxpayers to billions of euros in risky debt, and Draghi said the opposition stemmed from the country's fear of inflation. Runaway inflation in the 1920s destroyed people savings and contributed to the rise of Nazism.