Report: Dutch bank head explains Bundesbank break

[October 08, 2012]  AMSTERDAM (AP) -- The Netherlands' central bank president has reportedly explained why he broke ranks with German peer Jens Weidmann and agreed to support a European Central Bank plan to buy bonds issued by financially stressed governments such as Spain's.

Klaas Knot, who in June rejected the idea as monetary financing, changed course and supported it in August, leaving Weidmann as the sole opponent on the ECB's governing council.

Knot said in an interview with the Netherlands' Financieele Dagblad published Saturday the plan is okay because of the conditions attached to bond buying and because its goal is "restoring transmission" of ECB policies, not financing Spain.

He says falling Spanish bond yields would be a "side effect." He noted keeping the euro from falling apart is "within the mandate of the ECB."

[Associated Press]

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