RTRS: UPDATE 1-ECB keeps bond programme on ice, pressure on govts
(Adds analyst comment, background)
* ECB leaves bond programme unused for 13 weeks in a row
* Total amount ECB has spent on bonds stays at 212 bln eur
* Analysts raise doubts about programme's effectiveness
By Eva Kuehnen
FRANKFURT, June 11 (Reuters) - The European Central Bank
bought no government bonds for the 13th week running last week,
ECB data showed on Monday as the bank judges the controversial
programme of diminishing benefit in the face of the deepening
euro zone debt crisis.
The ECB has bought hardly any bonds from euro zone countries
since Mario Draghi took over as president in November as
policymakers have become increasingly wary of the risks piling
up on the balance sheet and the lack of incentives for reforms.
The programme's effectiveness has also been put into
question after the ECB took immunity status in the Greek debt
restructuring while private bondholders booked losses - a
scenario investors are worried could be repeated elsewhere.
"There is the risk that any purchases by the ECB would be
counterproductive," said Michael Leister euro zone rates
strategist at DZ Bank, pointing to a less than 40-percent
probability that Spain may follow in Greece's footsteps.
"It is not unlikely that we will see a restructuring of
Spain's debt in the next year or two," he said. "The more the
ECB buys, the more private investors will try to get out of
Spanish bonds to avoid a similar situation as in Greece."
Spain became the fourth euro zone country to seek
international aid in the three-year-old debt crisis on Saturday
as euro zone finance ministers agreed to lend Spain up to 100
billion euros to shore up its teetering banks.
The ECB has taken a new hardball approach and kept interest
rates unchanged last week despite a deteriorating economic
outlook, saying monetary policy could not solve some of the euro
zone problems, telling governments instead they had to act.
A lack of new ECB purchases last week means the bank has
only used the programme once since mid-February. It has spent
212.0 billion euros on bonds since launching the programme in
May 2010. (For data on bond buys )
No bonds previously bought under the programme matured last
week. As usual the bank will hold its weekly 'sterilisation'
tender - where it takes deposits from banks to offset its
controversial bond purchases - on Tuesday.
The ECB has stressed that it has not closed the Securities
Markets Programme officially, but rather said it remains in
place and can be reactivated if needed.
But the programme's critics at the ECB have gained traction
in recent weeks as the risks have become more visible,
especially with a potential Greek exit from the currency union.
Two of the bank's German policymakers quit last year over
the purchases, which critics say treads dangerously close to the
ultimate ECB taboo of financing governments.
The ECB also fears that its interventions give countries
less of an incentive to implement the necessary and sometimes
painful reforms.
