The European Central Bank kept the pressure on troubled euro zone countries on Thursday, sending a clear signal that while the bank may take further measures to bring sky-high borrowing costs down, struggling countries must act and take responsibility for their finances.
"First of all governments need to go to the EFSF ; the ECB cannot replace governments,” Draghi told reporters at a news conference after the central bank left rates on hold at 0.75 percent.
Troubled member states (related: world's biggest debtor nations ) can submit a request for aid from the European Financial Stability Facility (EFSF), Europe’s rescue fund, which can then respond by buying up bonds to drive yields down. But Germany wants to attach strict conditions to such a move.
German officials have also warned the ECB against large-scale bond buying in recent days and Draghi conceded that the German Bundesbank and chief Jens Weidmann had their “reservations” about the bond-buying program.
“The ECB is trying to put the ball firmly back in the court of the politicians. Monetary policy cannot solve this crisis. It can provide breathing space but it cannot solve it, James Ashley, senior economist at RBC Capital Markets told CNBC.Page 1 of 3 | Next Page