FRANKFURT (MNI) – Departing European Central Bank Executive Board
member Lorenzo Bini Smaghi hinted Thursday that the ECB could take more
aggressive action to intervene in government bond markets.
In his last interview before retiring from the ECB’s Executive
Board, Bini Smaghi argued that while the “concept of lender of last
resort to governments is misplaced” the ECB could intervene more heavily
on bond markets for monetary policy reasons.
“The mandate of the ECB is to implement the single monetary policy
of the euro area, with the objective of price stability,” Bini Smaghi
said to the FT in his last interview before retiring from the ECB’s
Executive Board.
With respect to implementing a common monetary policy “the current
spreads along the whole yield curve may raise some doubts about whether
we indeed have a single monetary policy in the euro area today and
whether the ECB is indeed fulfilling its mandate,” he noted.
“If the issue is not one of solvency [of governments] but rather
liquidity, then the ECB has room for action — one could even say that
the ECB has a duty of action — to make sure that it indeed implements a
single monetary policy,” Bini Smaghi said.
Bini Smaghi also would not exclude the option of quantitative
easing in the Eurozone should conditions requires.
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–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com
[TOPICS: MT$$$$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]
