ECB official backs EU rescue fund's buying bonds

A senior member of the European Central Bank said in an interview that the eurozone rescue fund should buy bonds of struggling countries to ease pressure on nations like Italy and Spain. "Certainly it's a mystery why the EFSF (European Financial Stability Facility) was allowed almost a year ago to undertake secondary market interventions and governments have not yet chosen to use that possibility," Benoit Coeure said in an interview with the Financial Times, on Thursday. He said the move would ease the "very severe strain" felt by Italy and Spain. Spain and Italy have struggled with soaring borrowing costs amidthe eurozone debt crisis, with Madrid in particular facing record borrowing levels after a recent bailout for its troubled banks failed to reassure investors. The comments of Coeure, a member of the ECB executive board, came a day after German Chancellor Angela Merkel said there were "no concrete plans" for the EU bailout funds to buy the bonds of struggling countries to drive down their borrowing costs. "There are no concrete plans that I know of, but there is the possibility in the EFSF and the ESM to buy bonds on the secondary market, bound up of course always with conditions," Merkel said. "But that is a purely theoretical comment about the contractual situation," she stressed. "This is not a subject for debate right now." In the FT interview, Coeure ruled out the ECB buying the bonds itself under its own bond-buying programme as the latter was "not an instrument that can be used to fix fiscal difficulties or to help insolvent banks."