ECB ups the pressure on governments

The ECB’s statement last week that it might buy more peripheral government bonds if countries first apply to the EFSF for support was a step forward. But Spain and Italy are not yet willing to accept the harsh reform and austerity conditions that would be required for EFSF bond purchases. And even once they are, there is no guarantee that the core countries – particularly Germany – will allow such purchases to go ahead. Accordingly, convincing action still seems a long way off and markets’ patience is wearing thin.