DUBLIN: 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 Friday.
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 programme.
"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 March.
"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.
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