says ECB should ready asset-buying plan for if needed
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[June 11, 2014]
By David Mardiste
(Reuters) - The European Central Bank should explore the
option of large-scale asset purchases and have such a
tool ready to use if needed, ECB policymaker Ardo
Hansson said on Wednesday.
Hansson joined a chorus of ECB policymakers who have said this week
that the bank could still do more to support the euro zone economy
after announcing a package of measures at its June meeting to avert
the threat of deflation.
The Estonian central bank governor said he was "cautious" about
printing money to buy assets, a policy known as quantitative easing
or QE, but that the ECB should ensure it is technically ready to use
such a tool.
"I think we should be exploring those options and actually have
those options on the shelf for possible use," Hansson told reporters
when asked about QE.
"We have introduced quite a substantial package of measures already,
so what I think is more important regarding possible future measures
is that we advance their technical preparation should they be
Not all ECB policymakers share Hansson's view. The head of Germany's
powerful and hawkish Bundesbank, Jens Weidmann, said late last week
it would be absurd to start talking about new measures before
assessing the impact of last week's actions.
The ECB cut interest rates to new record lows and launched a package
of measures to stimulate lending to the small and medium-sized
companies that are the euro zone's backbone. Speaking afterwards,
ECB President Mario Draghi said the central bank was not done yet
and could act again if needed.
A QE program like those already employed by the U.S., British and
Japanese central banks could potentially be the ECB's most powerful
tool to avert a Japanese-style deflationary spiral of falling
prices, slowing consumption and growth.
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But with euro zone government bond yields already at record lows,
the impact such large-scale purchases of euro zone debt would have
is questionable. Draghi has said the euro zone economy's reliance on
bank lending rather than capital markets might also mean such a
program would have a different impact than in the United States.
"Right now we already see the type of assets that might be purchased
are already relatively high. So I think at this stage I would be
cautious about using those type of channels," Hansson said.
(Reporting by David Mardiste; Writing by Eva Taylor; Editing by
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