“Monetary policy responsibility cannot substitute for government irresponsibility,” Trichet today told German lawmakers in Wildbad Kreuth, according to a text provided by the ECB. “Europe cannot afford to rest halfway, we need to be more ambitious. The proposals that we have seen in Brussels do not go far enough in the ECB’s view.”

Belgian and Irish credit-default swaps reached a record today and the cost of insuring the debt of nations from Portugal to Italy also rose. European finance ministers have pledged to tighten budget-deficit rules in a bid to contain the region’s debt crisis, though they have stopped short of meeting the ECB’s demand for more automatic penalties.

“We should be inflexible in applying sanctions if rules are breached,” Trichet said. “In limiting the power of discretion, we will strengthen the power” of the Stability and Growth Pact. “There must be a binding code of conduct for all parties concerned.”

The Markit iTraxx SovX Western Europe Index rose 1 basis point to a record 214 today after credit-default swaps on Belgium jumped 14 basis points and Ireland’s increased by 6 basis points to an all-time high. Contracts on Portugal rose 9 basis points to 534, the highest level since Nov. 30.

China’s Role

With the sovereign crisis showing little sign of abating, a Chinese central bank official pledged today that Europe and the euro will remain an investment priority for the nation’s world- record $2.65 trillion of foreign-exchange reserves.

“The euro and the European financial markets are an important part of the global financial system and were, are and will be one of the most important investment areas for China’s foreign-exchange reserves,” Deputy Governor Yi Gang said in a statement on the central bank’s website.

The ECB in December extended emergency liquidity measures for banks through the first quarter after Ireland’s aid package failed to convince investors that governments can push down budget deficits and prevent a breakup of the euro area. It has also stepped up government bond purchases after pausing the program for three weeks in October. Trichet said the purchase program is “ongoing.”

The ECB bought Portuguese government debt today, according to two people with knowledge of the transactions. The purchases mostly involved short-term securities, said one of the people, who asked not to be identified because the trades are confidential.

ECB Purchases

The ECB decided to buy sovereign debt in May to supplement a 750-billion euro ($974 billion) rescue plan for debt-stricken nations. It had already bought 60 billion euros of covered bonds to encourage bank lending, which Trichet said today will be held to maturity.

The decision to buy government bonds “was certainly not to finance debt-laden member states, but to address some severe malfunctioning of markets,” Trichet said. “Let me stress solemnly that our monetary policy stance is itself designed to deliver price stability over the medium term.”

Euro-area inflation accelerated to 2.2 percent in December, exceeding the ECB’s 2 percent limit for the first time in more than two years. Economists forecast the bank will raise its key interest rate from a record low of 1 percent in the fourth quarter of this year, a Bloomberg survey shows.