European Central Bank Governing Council member Nout Wellink said it is not the central bank’s task to rescue euro-area countries with funding problems.
“It’s not up to the ECB to save countries where governments run the risk of becoming insolvent,” Wellink, who also heads the Dutch central bank, said at a panel discussion in Amsterdam today. “We are not here to take over, on our balance sheet, the risks of the national economies of Europe.”
The Frankfurt-based ECB wants governments to take the lead in quelling the turmoil that threatens to spread to other countries from Ireland and Greece. Last week the central bank snapped up Portuguese and Irish bonds after ECB President Jean- Claude Trichet assured investors that policy makers will delay the withdrawal of emergency liquidity.
Wellink said today he’s “not in favor” of a joint euro- area bond because it would weaken the financial system as it is “a hidden way of burden sharing.”
German Chancellor Angela Merkel, who heads Europe’s largest economy, also rejects the common bonds and reiterated in Berlin that she opposes adding to the rescue fund for indebted nations.
Separately, Wellink said the price of gold “has increased excessively.”
Gold futures for February delivery jumped today to a record $1,429.40 an ounce on concern the U.S. will pump more cash into the economy and Europe’s debt woes will spread, boosting the appeal of the metal as an alternative to currencies.
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