Pressure mounts on Draghi as OECD chief wades into eurozone debt row

By PETER RANSCOMBE
Published on 03/09/2012 00:00

THE European Central Bank (ECB) must do more to try to save the eurozone according to the head of the Organisation for Economic Cooperation & Development (OECD), ratcheting up the pressure on bank president Mario Draghi ahead of crunch talks on Thursday.

OECD secretary-general Angel Gurria warned that the ECB’s current bailoout facilities – the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM) – are not enough and that the central bank should consider buying Italian and Spanish bonds to help prop up those countries’ struggling economies.

“If you have the ECB which can work in the markets in order to bring down maturities then why not?”, Gurria told business leaders at an international conference in Slovenia. “The system is at stake, the euro should not be put at risk. The EFSF and the ESM are not enough.”

Asked if the ECB should start unlimited bond buying, he said: “Yes, I believe they should, the sooner the better.”

Gurria said he hoped and expected Germany’s constitutional court to approve the ESM on 12 September, after it was endorsed by parliament in June. Failure to approve it would almost certainly doom the ESM. He also forecast the eurozone would remain intact despite the current crisis.

His comments came ahead of figures released today by business valuation firm American Appraisal, which found the eurozone debt crisis is taking its toll on mergers and acquisitions (M&A). The value of M&A activity in Europe fell by 21 per cent in the first six months of the year to £210 billion.