- If needed we have the possibility and other instruments to flood the economy with liquidity if necessary
- We have the option to do outright purchases but euro area doesn’t have single sovereign signature so it’s no surprise that we choose other instruments
- We still reserve the right to do other measures in the future
Asked about the strong euro;
- Excessive volatility is not in the interest of anyone
- Strong currency reflects economic strength
- Some banks won’t lend before balance sheets repaired
- ESM should recap banks directly bypassing sovereign
- Has to address lack of securitisation for SME’s at European level
That’s the problem with European QE. With other countries there’s one entity to deal with but with Europe it’s a case of who do they buy, how much and at what rates. That’s why their preferred method is LTRO’s which put liquidity right into the system via the banks. The difference is that the LTRO’s need to be repaid on date X as opposed to the Fed or BOE whose instruments can be allowed to mature and roll off anytime or at any rate they choose.
