UPDATE 1-ECB’s Orphanides-Political delays feeding debt crisis

* Inaction reflected in sovereign debt levels

* Pace of progress is “disappointing”

(Adds detail)

NICOSIA, April 11 (Reuters) – Delays by Europe’s politicians
in tightening controls on national budgets and debt is feeding
the crisis of confidence in the euro zone, European Central Bank
Governing Council member Athanasios Orphanides said on Monday.

“In my view, the euro is not at the centre of crisis… but
we do have a problem with the governance of fiscal policy in the
euro zone,” Orphanides told journalists.

“It is this governance problem which is causing difficulties
both in government bonds, and in some cases it is creating
concerns in banking systems.”

He was replying to a question asking whether he considered
Portugal’s request for aid had drawn a line under the euro
zone’s debt crisis.

Orphanides said the failure of euro zone leaders to agree on
the exact terms of how to expand the euro zone’s bailout fund,
the EFSF, in March, was disappointing.

EU leaders have agreed in principle to increase to an
effective lending capacity of 440 billion euros but have pushed
back the target for agreeing some of the details until the
middle of this year.

“Personally I am rather disappointed with the progress, and
I personally, and my colleagues on the ECB, would want to see
even more progress,” said Orphanides, who is also governor of
the Central Bank of Cyprus.

“It is somewhat disappointing that although there were
discussions for months, the heads of state had not managed to
take final agreements in March, so for that reason there still
is lingering uncertainty about what will (happen) at the end of

Orphanides said the ECB had made recommendations on how to
strengthen the fiscal policy framework. Non adoption of some of
those recommendations, he said, sowed doubts on sovereign debt

“That uncertainty is reflected in the price of bonds in
various countries,” he said.

(Writing by Michele Kambas, editing by Patrick Graham)

UPDATE 1-ECB’s Orphanides-Political delays feeding debt crisis