ECB: Draghi tosses euro zone mess back to politicians - by Eric Reguly

Mario Draghi

The European Central Bank went on hold at its monthly meeting in every sense of the word. It did not change interest rates, had little to say about its new sovereign bond purchasing program and gave no hint that it was on the verge of offering assistance to Spain, even though a bailout seems virtually certain as its economy stays stuck in reverse.

But ECB president Mario Draghi assured the markets once again that the euro was “irreversible” and that the ECB’s bond-buying program, known as Outright Monetary Transactions (OMTs), could swing into action quickly if a financially distressed country were to ask for help. “We are ready and have a fully effective backstop in place,” he said after the regular monthly ECB governing council meeting, which was held in Slovenia.

His comments delivered some momentum to the stock markets and sent the euro up almost half a percentage point to $1.296 (U.S.).

At the press conference after the meeting, Mr. Draghi was asked repeatedly if Spain was on the verge of a bailout or could avoid one. He would not comment directly, reiterating the ECB’s stance that it is up to governments to request assistance, not for the ECB to offer it in the absence of a request. “That’s up to Spain to decide, and the other euro area governments to decide,” he said.

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