* Irish Cbank chief says ECB now has the tools it needs
* Says Bundesbank will come to embrace new programme
By Padraic Halpin
DUBLIN, Sept 7 The European Central Bank's bond
buying programme will win over Germany's Bundesbank and other
doubters by operating in a disciplined way, and it will benefit
Ireland greatly, the bailout recipient's representative on the
ECB board said.
"Anybody who had any doubts that the ECB was prepared to
bring the tools needed ... any doubts must be removed now,"
Patrick Honohan, who also heads Ireland's central bank, said on
ECB President Mario Draghi announced on Thursday the bank
was ready to buy unlimited amounts of bonds of up to three-year
maturities of countries that requested a European bailout and
fulfilled strict conditions.
The scheme had "downsides and upsides," Honohan told
reporters, but more up than down.
The Bundesbank reiterated its opposition to the programme
while Germany's conservative newspapers on Friday accused Draghi
of writing a "blank cheque" to troubled euro zone states that
could put the entire currency at risk.
Honohan said the Bundesbank would eventually embrace the
"I think they will... I think that critics will gradually
realise that it is being operated in a business-like and
disciplined way and that it has all the positives of the
programme without all the potential negatives that they see."
Draghi said the ECB would only help countries that met
strict policy conditions, with the euro zone's rescue fund also
buying their bonds, and preferably with the IMF involved in
designing and monitoring the programme's conditions.
Honohan said the scheme would be extremely beneficial to
Ireland by removing the tail risk of a euro zone break-up, but
was unlikely lead to the purchase of Irish bonds by the ECB in
the near term.
The yield on Ireland's 2020 benchmark issue
had narrowed to 5.78 percent at 1037 GMT from 5.96 percent
before Draghi detailed the bond-buying plan on Thursday.
Draghi said the ECB would only buy bonds of countries that
are active in the debt market, for the time being likely ruling
out Portugal and Greece - which are issuing only short-term
bills at present - as beneficiaries of the programme.
The position for Ireland, which has made tentative forays
back into the sovereign bond market, is less clear-cut.
As well as resuming issuing treasury bills, Dublin has this
year launched two bond swaps and sold new long-term debt for the
first time since 2010 as it attempts to position itself to exit
the 85 billion euro bailout on schedule at the end of 2013.
Honohan said the new and potentially unlimited ECB programme
would be a far more powerful tool than the bank's earlier,
temporary bond-buying scheme, which has been dormant since
"It solidifies the euro, it tells the market the ECB is here
to do what it takes to get the euro system working more
effectively again," he said.
But that did not mean the bank was about to start printing
money in a hurry. "As you can see from yesterday, the ECB
printing presses are not even warming up" he said.