German Finance Ministry critical of ECB bond purchases - Spiegel

BERLIN (Reuters) - The German Finance Ministry is critical of the effects the European Central Bank's asset-purchase programme is having on bond markets, magazine Der Spiegel reported on Friday, citing an internal draft from the ministry.

The ECB is buying 80 billion euros worth of assets, mainly government bonds, every month in a bid to boost inflation and economic growth in the euro zone by lowering the cost of borrowing.

Given the ECB's purchases of government bonds, "the amount of federal bonds on offer is getter ever more limited", the draft said.

As a result, their "yields are coming under additional pressure", it said.

The ministry declined to comment on the report when contacted by Reuters, saying it did not comment on internal papers or matters relating to monetary policy.

Earlier this year there was widespread criticism in Germany of the ECB's monetary policy, with politicians complaining that low interest rates were hitting the savings and retirement provisions of ordinary Germans.

Officials at the Finance Ministry are concerned about the effect that the ECB's purchases are having on government bonds from other countries, the magazine report said.

For example, the yields on Italian bonds are lower than those of U.S. government bonds, it said, adding that this was "very likely a result of the start of the ECB purchase programme".

The interest on Italian government bonds has "approached Germany and France, the important benchmarks in Europe", it said.

Countries with higher debt such as Italy tend to pay higher interest rates because there is usually a higher risk involved in holding their debt.

(Reporting by Michelle Martin; Editing by Alison Williams)