FRESH DIVISIONS have emerged at highest levels of the European Central Bank (ECB) over its purchasing of sovereign debt, a measure it has used to support Ireland and other embattled euro countries.

Governing council member Axel Weber, chief of Germany’s Bundesbank, told an audience in New York that the programme has not worked and should be stopped. His remarks amount to a fresh act of defiance against ECB chief Jean-Claude Trichet, who is a staunch advocate of the programme.

The comments from Mr Weber, long regarded as Mr Trichet’s heir apparent, surprised some very close observers of the Frankfurt-based central bank. “Maybe the guy simply doesn’t want the job,” said one figure of the race to succeed Mr Trichet, who is due to retire next year.

Mr Weber opposed the sovereign debt initiative from the outset and made his views known on the very day the initiative was taken, on the same day as the European authorities and the IMF agreed to create a €750 billion safety net for distressed euro countries.

His remarks, late on Tuesday, met resistance yesterday from his governing council colleague Ewald Nowotny, chief of Austria’s central bank.

The scheme should not be scrapped too soon as it was useful as a “safety belt”, he said.

“I think it was effective at specific times when needed. . .I would not throw it away too early.”

But Mr Weber does not appear to be alone. The leading German daily Frankfurter Allgemeine Zeitung was reporting yesterday that Luxembourg’s central bank governor Yves Mersch and ECB chief economist Jürgen Stark recently questioned the bond-buying programme in similar terms.

To date the ECB has spent €63.5 billion buying bonds from euro countries, its figures show.

Neither the ECB nor the Government have ever said that it has bought up Irish sovereign paper, but well-placed sources have told The Irish Times that the bank was an active purchaser of the debt in the secondary market as Irish bond yields came under pressure in recent weeks.

Such support is in addition to the provision of extraordinary liquidity facilities to Irish banks, all of them under acute pressure as borrowers default and property-related loans transfer at steep discounts to the National Asset Management Agency.

Figures recently published by the Central Bank of Ireland show that Irish lenders recorded a large increase in their reliance on ECB funding last month, with short-term lending rising more than €24 billion to some €119 billion.

Mr Weber said the risk of “exiting too late” from extraordinary support programmes is greater than the danger of exiting too early. “These securities purchases should now be phased out permanently,” he said.