Italy warned by ECB and IMF over reforms

A member of the European central bank's governing council has warned it may stop buying Italian debt if the government does not adopt promised financial reforms. Luxembourg council member, Yves Mersch, made the warning in an interview with Italian newspaper, La Stampa published on Sunday. The ECB re-started its bond buying programme three months ago. However the bank has said it will not buy bonds indefinitely. "If the ECB board reaches the conclusion that the conditions that led it to take a decision no longer exist, it is free to change that decision at any moment. We discuss this all the time," said Mr Mersch. "Our job is not to remedy the errors of politicians," he added. The head of the International Monetary Fund, Christine Lagarde, has said that Italy's planned budgetary reforms "lack credibility". Italy agreed a limited package of budget reforms on Wednesday evening. But the Italian cabinet failed to agree to issue a decree implementing the changes, meaning that they must now go to a confidence vote in parliament. Ms Lagarde said the IMF would carefully monitor the implementation of reforms, after Italy invited it to do so. "We will go quarterly [to Italy]. We will check that what Italy has promised Italy is delivering. And if it is not delivering I will say so," Ms Lagarde told the BBC. European Commission President Jose Manuel Barroso said that the commission would also step up its monitoring of Italy. A team from the commission will travel to Rome next week, he said.