Slovak PM says ECB shouldn’t buy govt bonds

Traders said the ECB bought Italian bonds aggressively this week to contain a spike in yields that has pushed financing costs on its sovereign debts of 1.9 trillion euros ($2.6 trillion) above sustainable levels.

The bank has been buying bonds of struggling euro zone governments on and off for more than a year but many economists suspect the crisis can now only be solved by broader and more aggressive action by the ECB — something that is firmly opposed by Germany.

"The central bank in a currency union should focus mainly on monetary policy and role of last resort lender for the financial sector. It (the ECB) should, for sure, not buy bonds of distressed countries," Radicova said in a speech delivered at the Oxford University.

Slovenian central bank chief Marko Kranjec, a member of the ECB's governing council said on Saturday the bank was willing to support sovereign borrowers as long as it does not put price stability at risk.

Radicova, whose centre-right government collapsed last months on inner-coalition row over support for a stronger euro zone bailout, said euro zone needs institutions providing financial support for cash-ailing countries.

The bank more than doubled its purchases of government bonds in the first week of Mario Draghi's presidency, which delivered a cut in interest rates as the bloc faced increasing risks of s mild recession.