FRANKFURT (Reuters) – Buying debt directly from euro zone governments could undermine a legal requirement for them to run sound budget policies, European Central Bank President Christine Lagarde said in a letter to a member of the European Parliament.
The comments suggest that unlike some other central banks, the ECB will not buy bonds directly from either national or local governments, remaining only a secondary market buyer even as it spends up to 1.1 trillion euros this year.
“The Treaties have been understood to mean that primary market purchase of government debt, i.e. the direct financing of governments, would undermine the capability of this objective to encourage such disciplined budgetary policy,” she said in a letter dated April 21.
Writing to another member of Parliament, Lagarde added that the provision of so-called helicopter money has never been discussed by the Governing Council and thus policymaker have no formal position on such an instrument.
(Reporting by Balazs Koranyi; Editing by Francesco Canepa)
