Draghi to Rome: Don't Expect an ECB Rescue If Budget Talks Fail

European Central Bank President Mario Draghi is sending a warning to Rome ahead of its formal budget submission: Don't expect the ECB to save the day, reports CNBC.


In a Saturday press conference at the IMF and World Bank meetings in Bali, Indonesia, Draghi said he was confident that a budget agreement would be reached and urged all parties to "calm down with the tone." He also voiced relief that there has not been evidence of a wider spillover effect in European bond markets, even as Italian yields hit multi-year highs. "Everything that happened today is local to Italy."

But if things do turn worse for Italian financial markets, will they be able to lean on the ECB for a bailout?

Draghi told CNBC that would not be a possibility.

Further, when asked whether an eventual realization of contagion or a further rise in Italian yields would force the ECB to scrap tightening plans by year end, Draghi told CNBC: "I don't want to speculate on this. I just don't want to conceive such a hypothesis. I'm confident that the authorities — and by the way all parties, not only Italy — all parties will in the end find a compromise solution, an agreement."

Draghi is bluffing here, if contagion does develop, he will start pumping money 24 hours per day.

-RW 

(via CNBC)