OECD chief backs European Central Bank's bond

The head of the OECD, Angel Gurria said he supports the European Central Bank's plan to buy sovereign bonds of eurozone nations, in an interview published on Saturday. "The ECB president Mario Draghi has clearly stated how the ECB can help to reduce the EU debt crisis by buying bonds, and I support this policy," the secretary general of the Organisation of Economic Cooperation and Development said. "The signal to the markets was clear: speculators will lose their bets against the euro because the ECB is going to use every last resort," he told German newspaper Neue Osnabruecker Zeitung. The ECB launched a bond-buying blitz under the Securities Market Programme (SMP) in 2010 to help debt-wracked eurozone countries that were finding it difficult to drum up financing in capital markets. But the SMP has lain dormant since February following the ECB's moves to pump more than one trillion euros ($1.23 trillion) into the banking system via three-year funding operations in December and February. In early August Draghi said the ECB "may" resume bond purchases after an earlier announcement pledging that the bank would do everything it could to help the embattled euro. It has not started buying bonds again. Gurria told the newspaper that countries like Spain or Greece must implement strict reforms to become more competitive and make savings. "Support from the ECB will give them the time they need," he said. He also said he wanted Greece to stay in the eurozone but called on Athens to respect conditions imposed by the EU and the International Monetary Fund in return for bailout packages which are keeping its economy afloat. The ECB has so far accumulated 211.5 billion euros in bonds from Greece Ireland, Portugal, Italy and Spain as part of the programme.