European central bank support for Italy is not unlimited: Knot

The new Italian government should not count on unlimited support from the European central bank, Klaas Knot, president of the Dutch central bank and ECB board member, says in Monday’s Volkskrant.


The ECB’s support for Italy is conditional and temporary, Knot said, and it will be reduced if the Italian government does not reform.
In addition, European leaders must boost the EFSF emergency fund, so it can take over buying up state bonds from the central bank. If they fail to reach agreement on doing this the ECB will slowly wind down its bond-buying programme and ultimately end it.
‘The ECB is buying time,’ he told the paper. ‘You buy time to do something… there is clear agreement that ECB intervention is temporary and EU leaders have to take it over with their emergency fund.’
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