Nicolas Sarkozy, the French president, has welcomed comments by Mario Draghi, the incoming president of the European Central Bank, which suggested that the bank could continue to buy sovereign bonds of countries such as Italy and Spain.
Mr Draghi, who replaces Jean-Claude Trichet as ECB head next week, on Wednesday said the central bank’s use of “non-standard measures” was preventing the “malfunctioning of the money and financial markets from obstructing the monetary transmission mechanism”.
Speaking after European leaders reached a deal on reducing Greek debt levels on Thursday morning, Mr Sarkozy said Mr Draghi’s statement was a clear signal that the ECB would continue to stand alongside the European financial stability facility – the eurozone’s rescue fund – in providing a “wall of money” to prevent the spread of debt contagion.
The central bank programme, aimed at holding down interest rates demanded by investors worried about contagion from the Greek crisis, was due to be wound down once the EFSF is fully operational.
ECB officials said there was no change of policy intended in Mr Draghi’s remarks. The bank has not ruled out continuing the special measures. But Mr Sarkozy said at the end of the summit that Mr Draghi “could not have been more clear”.
Mr Trichet had strongly resisted pressure from France and elsewhere for the ECB to commit to further non-conventional measures to prevent contagion, fearing the erosion of the bank’s independence. He had been backed by Angela Merkel, the German chancellor.
France and its supporters have argued that the extraordinary interest rates demanded of Italy and Spain in effect undermined the proper functioning of monetary policy, and so justified further special measures such as bond purchases.
A senior French official said it was very significant that Ms Merkel had not objected to Mr Draghi’s comments.
Mr Sarkozy had argued forcefully at a tense meeting in Frankfurt a week ago with Ms Merkel, Mr Trichet and other leaders that the ECB should be “in the front line intervening massively” to help contain the eurozone debt crisis. He is understood to have had some support for his view from the International Monetary Fund.
However, Ms Merkel had lined up closely with Mr Trichet, reflecting deep concerns in Germany about the independence and role of the ECB.
At Wednesday night’s summit, eurozone leaders were set to include in their communique a statement saying: “We fully support the ECB in its action to maintain price stability in the euro area.”
The ECB is meanwhile also continuing to provide unlimited liquidity to eurozone banks, including the relaunch on Wednesday of offers of unlimited one-year loans.