MADRID (MNI) – It is not impossible that the European Central
Bank’s program of sovereign debt purchases could be reactivated one day,
ECB Governing Council member Luis Linde said Tuesday.

The new governor of the Bank of Spain was asked following his first
appearance before the Spanish parliament’s Committee of Economy and
Competitiveness whether he would advocate the resumption of bond
purchases at the ECB, having said in earlier comments here that the
program had had a positive impact.

“Of course it has been a positive measure that the ECB at certain
moments bought the debt of member countries of the monetary union,” he
said. “I know that there were moments at which some governments
would have desired more purchases, and others less.”

“It is not impossible that in the future, under some circumstances,
the program could be reopened,” he continued. “It is not impossible.
It’s not going to happen now, as far as I know, in the next, let’s say,
next weeks, but this program is not …. forgotten, it’s there and it
can be reactivated at some moment.”

Linde made clear that he believed that the euro would endure,
calling its defense “the defense of the continuity of the monetary
union.”

“I have no doubt that the monetary union is going to continue …
because the alternative is almost inconceivable,” he added.

The Bank of Spain has a “cordial working relationship” with the
ECB, he said, which is “for Spain a very, very important institution.”
“We feel well integrated,” he said.

As for his own institution’s relationship with the triumvirate of
ECB, the European Commission and the International Monetary Fund when it
is time for those entities to ensure the conditions of financial
assistance Spain is to receive, “there is absolutely nothing in the
Memorandum of Understanding that puts the Bank of Spain under the orders
of the troika,” he said.

Linde said of Spain’s banking sector troubles that “the size of the
problem is manageable.”

He emphasized that Spain must realize it has “a problem of
credibility in public finances … that isn’t resolved by resorting to
academic” arguments of how appropriate continued austerity is.

To restore confidence, fiscal responsibility is essential,
he said. “I don’t think we have any other choice but to meet” fiscal
obligations, he said.

Still, “we have to be a little optimistic because we are doing many
reforms,” not just with respect to labor markets, that will ultimately
pay off.

“It is important that those outside Spain see that we are able to
reform,” he said.

–Frankfurt bureau tel: +49-69-720-142. Email: dbarwick@marketnews.com

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