FRANKFURT (MNI) – The risks stemming from the European Central
Bank’s sovereign bond-buying program have been minimized and are
outweighed by the risks of inaction, ECB Executive Board member Joerg
Asmussen said Wednesday.

In prepared remarks for a speech in Mainz, Germany, Asmussen
reiterated that the ECB will not lose sight of its price stability goal
and stressed that any bond buying under the so-called OMT program would
be halted if a country failed to meet the conditionality that comes with
it.

“It is clear as daylight: if a country does not meet the
conditions, no OMT buys will take place,” Asmussen said. Any country
applying for aid under the OMT must first request a program under the
European Stability Mechanism.

Asmussen said he could understand some of the concerns that the ECB
was taking on new risks by offering Eurozone members the possibility of
renewed bond-buys under the OMT.

“On the one hand, it is correct that such interventions indeed
entail risks for the Eurosystem. But such risks must of course be
contrasted with the risks of not acting,” he said. “On the other hand,
we believe the risks that are being taken with the OMT are as small as
possible.”

Asmussen offered assurances that the ECB remained focused on price
stability despite its use of non-standard measures. He again stressed
that actions were taken because the monetary policy transmission
mechanism is hampered, endangering that price stability goal.

“We at the ECB at all times have a primary goal of ensuring price
stability in the euro area,” he said. “We will not take our eyes off
this goal, not even when different parts of the euro area are creaking
and monetary policy is faced with different challenges.”

Asmussen reiterated that governments must also do their “homework”
to exit the crisis, both at the national and the European level.
“Determined continuation of fiscal consolidation is therefore
essential,” he said.

Asmussen said he hoped steps being taken at the European and
national level would stabilize financial markets “so that monetary
policy can depart from crisis management as soon as possible.”

— Frankfurt bureau: +49 69 720 142; email: ccermak@mni-news.com —

[TOPICS: M$X$$$,M$$EC$,MGX$$$,MT$$$$,M$G$$$,M$$CR$]