FRANKFURT (MNI) – The European Central Bank’s mandate is adequate
and should not be questioned, but policies outside the ECB’s purview
must also be strengthened to deal with the Eurozone crisis, ECB
Executive Board member Joerg Asmussen said Tuesday.

Asmussen also stressed that the ECB’s newly announced OMT
bond-buying program would be “a much better program” than its
predecessor, the SMP, and would be used only as a monetary policy tool.

“Our mandate is clear, it is comprehensive, it is adequate and it
should not be questioned,” Asmussen said in a speech at Goethe
University here.

But “clearly, central banks should not be overburdened,” Asmussen
added. “Structural problems require a structural response. These
deficits need to be addressed by reinforcing the available policy
instruments outside the purview of the central bank.”

Asmussen reiterated that “conditionality is key” as he stressed
that the ECB would not intervene in secondary bond markets unless a
country first signed up for an aid deal with the Eurozone’s rescue fund,
and even then only if it served the bank’s monetary policy goals.

“The OMT is in no way a substitute for continued efforts in
structural reforms and fiscal consolidation on the side of governments,”
Asmussen said. The OMT is designed to “ensure the singleness of monetary

“Monetary policy remains fully independent and the Governing
Council decides independently when to activate the OMT, entirely on the
basis of monetary policy considerations,” Asmussen said. The ECB’s price
stability mandate “remains entirely untouched.”

Asmussen also reiterated the details of the plan, including
elimination of the senior creditor problem and increased transparency.
The ECB will publish its aggregate OMT holdings on a weekly basis, and
the average maturities and breakdown of purchases by country on a
monthly basis.

On the ECB’s long-term refinancing operations, Asmussen said the
“full effects” of the three-year loans “will unfold over time and may be
gauged only as time proceeds due to the usual lags in monetary policy.”

With the ECB set to take on a financial supervision role, Asmussen
stressed that this new task “may not prejudice price stability as our
primary objective.”

— Frankfurt bureau: +49 69 720 142; email:

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