Monday

3rd Aug 2020

Portuguese head breaks ranks, urges ECB bond-buying

Portugal's President Anibal Cavaco Silva has broken the government's tacit pro-German line and urged the European Central Bank (ECB) to start buying bonds from troubled eurozone countries.

"Why not have the ECB start applying now to public debt securities from Portugal and Ireland the orientation announced by its president," Cavaco Silva said in a message posted on his Facebook page on Thursday (9 August).

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • Silva's Facebook page - Lisbon has so far been a poster child for southern bailouts (Photo: facebook.com)

He was referring to statements made last week by ECB chief Mario Draghi that the bank could start buying distressed bond, but only in September, pending an internal review and a vote by the bank's board.

The German board member, central bank chief Jens Weidmann, so far opposes the move, which is a taboo in German politics.

Portugal signed up to €78 billion in aid from the eurozone bailout fund and the International Monetary Fund (IMF) in 2011, after Greece and Ireland.

EU and German politicians have constantly praised the government in Lisbon for its reforms in an attempt to show that not all southern countries are like Greece.

Popular resistance to austerity has been less visible in Portugal than in Greece and Spain, even though unemployment remains over 15 percent and the economy is still in recession.

The open Portuguese appeal comes after more veiled demands from the Spanish and Italian governments, as well as the IMF, for the ECB to play a new role.

Unacceptable in Germany's view, which wants the ECB to act on the model of the Bundesbank - which is completely independent from politics - and to stick to its original EU mandate on keeping down inflation.

The ECB has a problem in asking EU states which it helps with cheap loans or bond-buying to make political reforms and budget cuts because it does not have any democratic oversight.

"If the ECB will buy any more bonds, it would take up a distribution role for which it has no mandate or democratic legitimacy," Claudia Buch, one of the German economists on a recently-created panel of "wise men" on ECB reforms, told Der Spiegel in its latest print edition.

ECB in nuanced denial of yield cap plans

The European Central Bank has condemned media reports about a bold plan for the bank to bring down eurozone government borrowing costs but has not denied the idea outright.

Economic gloom poses problems for bailed-out countries

Recession-hit Portugal is likely to miss its deficit target this year, the troika of international lenders is expected to conclude in September. Meanwhile, lower growth in Ireland may also bring troubles further down the road.

Portugal in crisis after 1mn say No to austerity

Portugal is in political crisis as it struggles with a major popular backlash in the face of troika-approved austerity measures that would raise social contributions for employees.

ECB under pressure on bond-buying

Pressure is mounting on the ECB ahead of a key meeting on whether to buy Italian and Spanish bonds to help stabilise the euro.

News in Brief

  1. France imposes new Covid-19 tests on visitors
  2. Brussels closes all mosques for Eid festival
  3. Amsterdam and Rotterdam tighten face mask measures
  4. UK tightens lockdown measures in north England
  5. EU banking watchdog warning on 26 banks
  6. 60,000 rally in Minsk ahead of Belarus election
  7. 'Better Regulation' is key for EU policy-making, auditors say
  8. Polish tribunal to examine EU gender-violence treaty

EU forecasts deeper recession, amid recovery funds row

The economies of France, Italy and Spain will contract more then 10-percent this year, according to the latest forecast by the EU executive, as it urges member state governments to strike a deal on the budget and recovery package.

Stakeholders' Highlights

  1. UNESDANext generation Europe should be green and circular
  2. Nordic Council of MinistersNEW REPORT: Eight in ten people are concerned about climate change
  3. UNESDAHow reducing sugar and calories in soft drinks makes the healthier choice the easy choice
  4. Nordic Council of MinistersGreen energy to power Nordic start after Covid-19
  5. European Sustainable Energy WeekThis year’s EU Sustainable Energy Week (EUSEW) will be held digitally!
  6. Nordic Council of MinistersNordic states are fighting to protect gender equality during corona crisis

Latest News

  1. EU mishandling corona-travel, Belgian expert says
  2. France wants rule of law sanctions on recovery budget
  3. The three 'Elephants in Room' in EU-India relations
  4. First use of new EU sanctions against Russia, China hackers
  5. Six 'LGBTI-free' Polish cities left out of EU funding
  6. EU's new Security Union Strategy is a good first step
  7. US 'cavalry' leaving Germany to go back home
  8. Why is building renovation 'Cinderella' of EU Green Deal?

Join EUobserver

Support quality EU news

Join us