Incoming ECB boss in stern warning over Italian bonds
MARIO Draghi, the incoming head of the ECB, has warned that the bank will not buy up Italian bonds indefinitely.
Speaking in Paris, Mr Draghi - who takes over from Jean-Claude Trichet in November - urged eurozone members to strengthen the existing bailout fund.
This would relieve the ECB of having to step in to purchase government bonds.
Italy has relied on the ECB to buy its bonds ever since the interest rates to buy 10-year bonds hit 6pc in August. Italy was to have pushed through a €45bn austerity package in return.
But Silvio Berlusconi's decision to water down the measures has drawn sharp criticism.
Italian president Giorgio Napolitano warned that yesterday market sell-off, which trashed Italy's government bonds yesterday, as a clear signal that urgent action was needed to strengthen budget measures.
"No one can overestimate the alarming signal from the surge in the differential between the prices of Italian public debt instruments and those of Germany," Mr Napolitano said in a statement.
"It is a sign of the persistent difficulty in regaining trust, as is urgently and indispensably required," the head of state said, adding that he urged all parties not to block measures needed to restore credibility.