ECB staying out of government bond markets

FRANKFURT
The European Central Bank stayed out of government bond markets for the ninth week running, making debt-ridden countries like Spain and Italy more reliant on local banks for financing as private investors remain uneasy about their economic prospects
The ECB has bought government bonds off and on over the past two years to help contain the region's debt crisis
But some critics say it amounts to support for ailing euro-zone governments and exceeds the ECB's mandate to maintain price stability
ECB governing council member and also head of the German central bank, Jens Weidmann, who has openly criticized the bond purchases, said Saturday that the bond-buying program is still in place
"It is dormant, but can be reactivated. That is the decision, but you know my attitude," Weidmann said in an interview with Sueddeutsche Zeitung
The ECB put its much-debated bond-buying program essentially on hold after pumping EUR1.019 trillion into the banking system late last year and early this year
Commercial banks have used some of those ECB funds to purchase euro-zone government bonds, which has helped lower bond yields, especially in Spain and Italy
But it is unclear how long banks will be willing to take on more government risk. With much of Europe in recession, many banks, especially Spain and Italy, are struggling
The last time the bank settled government bonds, in the second week of March, the amount totaled EUR27 million
The central bank announces each Monday the value of its bond purchases completed in the seven days up to, and including Wednesday of the previous week. The ECB doesn't break down the debt-purchase figures either by country or maturity
The ECB further said Monday it will drain EUR214.0 billion Tuesday from the market at a variable-rate tender with a maximum bid rate of 1.00%, unchanged from last week's amount. The tender is aimed at offsetting the potential inflation-boosting impact of the bond purchases