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| Version 2 | Version 3 |
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| ECB's Draghi urges swift action on bailout fund | ECB's Draghi urges swift action on bailout fund |
| (about 1 hour later) | |
| The new governor of the European Central Bank (ECB), Mario Draghi, has called for "urgent action" to implement the new eurozone bailout fund. | The new governor of the European Central Bank (ECB), Mario Draghi, has called for "urgent action" to implement the new eurozone bailout fund. |
| Speaking in Frankfurt, Mr Draghi expressed impatience with the lack of progress by European governments. | Speaking in Frankfurt, Mr Draghi expressed impatience with the lack of progress by European governments. |
| "Where is the implementation of these long-standing decisions? We should not be waiting any longer," he asked at Friday's European Banking Conference. | "Where is the implementation of these long-standing decisions? We should not be waiting any longer," he asked at Friday's European Banking Conference. |
| His comments came as markets remained jittery about the crisis. | His comments came as markets remained jittery about the crisis. |
| By mid-morning on Friday, all major European markets were down between 0.5% and 1.2%. | By mid-morning on Friday, all major European markets were down between 0.5% and 1.2%. |
| In his speech, Mr Draghi suggested the ECB's main job remained to ensure long-term low inflation. | In his speech, Mr Draghi suggested the ECB's main job remained to ensure long-term low inflation. |
| "Credibility implies that our monetary policy is successful in anchoring inflation expectations over the medium and longer term," he said. | "Credibility implies that our monetary policy is successful in anchoring inflation expectations over the medium and longer term," he said. |
| He called for governments to play their role in tackling the debt crisis through "solid public finances and structural reforms", as well as reforms to the way the eurozone works. | He called for governments to play their role in tackling the debt crisis through "solid public finances and structural reforms", as well as reforms to the way the eurozone works. |
| Investors and the ECB are awaiting details of how the size of the eurozone bailout fund - the European Financial Stability Facility - will be boosted to 1tn euros (£855bn; $1.3tn). | Investors and the ECB are awaiting details of how the size of the eurozone bailout fund - the European Financial Stability Facility - will be boosted to 1tn euros (£855bn; $1.3tn). |
| Bond falls | Bond falls |
| In the meantime, traders have looked to the central bank to ensure the cost of borrowing to Italy and Spain does not rise too high. | In the meantime, traders have looked to the central bank to ensure the cost of borrowing to Italy and Spain does not rise too high. |
| If interest on the debt issued by Italy and Spain becomes too high then their debt repayments could become unsustainable, triggering an economic crisis. | If interest on the debt issued by Italy and Spain becomes too high then their debt repayments could become unsustainable, triggering an economic crisis. |
| Reported intervention by the ECB to buy Italian and Spanish government bonds on Friday helped keep bond yields from rising further. | Reported intervention by the ECB to buy Italian and Spanish government bonds on Friday helped keep bond yields from rising further. |
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| By mid-morning, Spanish 10-year bonds were trading at a yield of 6.44% while Italian 10-year bond yields were at 6.78%. | By mid-morning, Spanish 10-year bonds were trading at a yield of 6.44% while Italian 10-year bond yields were at 6.78%. |
| On Thursday, Spain's borrowing cost at an auction of 10-year bonds was almost 7%, which is a level seen as unsustainable. | On Thursday, Spain's borrowing cost at an auction of 10-year bonds was almost 7%, which is a level seen as unsustainable. |
| In Italy, new Prime Minister Mario Monti won a confidence vote on Thursday night after outlining austerity measures aimed at restoring confidence in the country's economy. | In Italy, new Prime Minister Mario Monti won a confidence vote on Thursday night after outlining austerity measures aimed at restoring confidence in the country's economy. |
| A further vote in the lower house is expected on Friday. | A further vote in the lower house is expected on Friday. |
| ECB role href="/news/special/business/11/economy_jargon/css/main.css?cachebuster=cb00000001" rel="stylesheet" type="text/css" /> Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule. href="/news/business-15060411">Glossary in full | |
| Earlier in the week, the head of the Bundesbank - Germany's central bank, which is officially subordinate to the European Central Bank - openly opposed the ECB coming to the rescue of troubled Italy and Spain. | Earlier in the week, the head of the Bundesbank - Germany's central bank, which is officially subordinate to the European Central Bank - openly opposed the ECB coming to the rescue of troubled Italy and Spain. |
| German Chancellor Angela Merkel reinforced that stance on Thursday: "If politicians think the ECB can solve the euro crisis, then they are mistaken". | German Chancellor Angela Merkel reinforced that stance on Thursday: "If politicians think the ECB can solve the euro crisis, then they are mistaken". |
| Mr Draghi's speech appears to support her position. | Mr Draghi's speech appears to support her position. |
| Many analysts believe that to stem contagion in the eurozone the ECB should act as "lender of last resort" and commit to buy up unlimited amounts of Italian and Spanish debt, instead of the limited interventions it has been carrying out so far. | Many analysts believe that to stem contagion in the eurozone the ECB should act as "lender of last resort" and commit to buy up unlimited amounts of Italian and Spanish debt, instead of the limited interventions it has been carrying out so far. |
| France, whose AAA credit rating has come under pressure, has called for the ECB to take stronger action. | France, whose AAA credit rating has come under pressure, has called for the ECB to take stronger action. |