ECB president defends bond-buying programme

3 June 2013

The head of the European Central Bank (ECB) Mario Draghi has come to the defence of its bond-buying programme, known as Outright Monetary Transactions.

Under the scheme, the ECB can buy bonds of eurozone countries to lower their overall borrowing costs.

For example, its announcement last year managed to help reduce borrowing expenditure for countries like Spain and Italy, both of which are lumbered with high amounts of debt.

However, there are some, including EU superpower Germany, that believe the practice allows debt-laden nations to avoid making necessary reforms.

A court hearing against the programme will take place in Germany later in June.

Mr Draghi defended the plan and said the ECB can only start buying bonds of a country after it had requested a bailout and as a result agreed to reforms.

In a speech in Shanghai, reported by the Associated Press, he said: "They can either reform without OMTs and retain economic sovereignty or they can reform with OMTs but give up some of their economic sovereignty."

By Claire Archer

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