BLED, Slovenia (Reuters) – The European Central Bank should not embark on unlimited bond buying to help stem the euro zone debt crisis, Slovak Deputy Prime Minister Miroslav Lajcak said on Monday, echoing euro zone heavyweight Germany’s opposition to such a debt-buying scheme.
The ECB is expected to unveil details of a plan enabling it to buy Italian and Spanish government bonds to lower their borrowing costs, but Germany’s powerful Bundesbank is implacably opposed to the plan. Lajcak took Buba’s side in the debate.
“I don’t think this will be a solution to the problem. We can introduce these mechanisms only when everybody plays by the rules, when everybody has demonstrated that they are doing its homework,” Lajcak said when asked whether ECB should start an unlimited bond buying.
Slovakia, like Germany, also opposes the idea of issuing joint euro zone bonds.
“We must not see this mechanism of issuing bonds as a means to share the debts. Those who are playing by the rules must not be paying debts of those who are not,” Lajcak said in an interview on the sidelines of an economic and political conference in Slovenia.
His comments came a day after Angel Gurria, the secretary general of the Organisation for Economic Cooperation and Development, told the same conference that the ECB should launch an unlimited bond buying program “the sooner the better”.
Lajcak also said he expected the United States and China to continue to purchase euro zone bonds as the stability of the euro zone is in their interest as well.
“Our internal challenges are global challenges too and for me the bottomline is that it’s in China’s interest to have a stable European Union, to have a stable euro as it is in the interest of the United States.”
Lajcak refused to speculate on whether Greece could leave the euro zone but said the euro zone will survive even if some of its members were to leave, adding the decisions to be taken in the autumn, which involve establishing of the banking union, will be crucial to solving the euro zone debt crisis.
“We shall have another European council meeting in October and I think this will send a very strong signal … and improve market confidence,” Lajcak said.
Slovakia joined the euro zone in 2009 and its export-oriented economy made it the zone’s fastest-growing member as it became more attractive to investors after joining the currency block.
“I have no doubt (that the euro zone will survive)… it will be a different zone, it might have different rules, it might eventually have a different amount of members … but it will survive,” Lajcak said.
(Reporting By Marja Novak; Editing by Zoran Radosavljevic and Hugh Lawson)
