Speaking in Paris, Coeure also said that cutting
the ECB's deposit rate into negative territory was a policy
option for the bank but would not be an exchange rate policy.
In a speech on "Currency wars and the Future of the
International Monetary System", Coeure asked whether, from the
ECB's perspective, central banks should take account of exchange
rates in monetary policy; whether there is a currency war now;
and whether international cooperation is needed in this regard.
He replied "Yes, but it's complicated," to the question of
whether central banks, in the ECB's view, should look at the
Answering the question of whether there is a currency war, he
said: "No. But it may come, so we need a framework for
cooperation to prevent it occurring."
The G20 doctrine of avoiding competitive devaluations was still
being respected, Coeure told a conference in Paris organized by
the Fondation Maurice Allais, adding this situation was a
"positive sum game" for the world economy.
Coeure stressed that the ECB's Governing Council had been
unanimous in agreeing its willingness to use conventional and
unconventional policy instruments, if needed.
Reuters reported last week that the ECB is preparing a package
of policy options for its June meeting, including cuts in all
its interest rates and targeted measures aimed at boosting
lending to small- and mid-sized firms. [ID:L6N0O05MM]
"It is an option," Coeure said of the negative deposit rate,
which would essentially see the ECB charge banks for holding
their money overnight, adding "this is not exchange rate
As interest rates would remain low for a long period of time to
protect the euro zone recovery, the risk of asset 'bubbles'
arising would increase and this would require determined use of
national macroprudential policy instruments to counter them, he
(Reporting by Paul Taylor and Paul Carrel; Editing by Mark
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