Central Banks

Sunday, July 29, 2012 - 19:13

Schaeuble Denies EFSF To Start Buying Spanish Bonds: Press

BERLIN (MNI) - German Finance Minister Wolfgang Schaeuble has denied media reports that Europe's bailout fund EFSF could soon start buying Spanish government bonds.

"No, there is nothing to these speculations," Schaeuble told the German weekly Welt am Sonntag in an interview published Sunday.

The minister argued that the high yields on Spanish government bonds were not overburdening the country. "The fiscal needs of Spain over the short term aren't that large," he said.

The European rescue package for Spain's financial sector is sufficient, Schaeuble reckoned, predicting that Madrid's reform efforts would soon be recognized by the markets.

However, the German weekly Der Spiegel reported over the weekend that European Central Bank President Mario Draghi planned to tackle the debt crisis together with the EFSF.

According to the magazine, the EFSF is to buy government bonds on the primary markets, while the ECB will buy bonds on the secondary markets. This would double the fire-power of the European crisis-fighting instruments, Der Spiegel wrote.

Horst Seehofer, the leader of the Bavarian CSU, the sister party of Chancellor Angela Merkel's CDU, said in a television interview aired Sunday that he opposed bond purchases by the ECB.

"One would bypass the national parliaments with such a policy," Seehofer told the German ZDF public television. "If the European Central Bank purchased bonds it would circumvent the Bundestag," the lower house of parliament, he said.

--Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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