–ECB Coene: Negative Interest Rates A Possibility
–Coene: Countries Must Satisfy Conditionality For ECB To Buy Bonds
–ECB Coene: Non-Standard Steps Don’t Tackle Fundamental Problems

LONDON (MNI) – European Central Bank Governing Council Member Luc
Coene thinks it is unlikely that the central bank will engage in
outright bond purchases.

Coene told an audience at the European Economic and Finance Centre
here that Spain and other countries would have to request a program
with the euro zone’s bailout fund in order for the ECB to buy its bonds:

“I think it’s very unlikely – given the mandate we have and the
treaty we have – that the ECB will engage in outright bond purchases. Of
course, never say never as they say. It’s clear that if Spain decides
not to demand a program with the EFSF we will not buy Spanish
bonds, the same is valid for the other countries … Whatever country
wants us to buy its bonds has to submit to the program with appropriate
conditionality and then only on that condition will we buy bonds and
only on the short part of the maturity.”

Reiterating the comments of ECB President Mario Draghi, Coene
stressed that countries would have to abide by strict conditionality to
qualify for ECB purchases of their bonds.

But negative interest rates did remain a “possibility” as was
extending the ECB’s LTRO operations, the official said.

“You have different alternatives (if the ECB decides to further
ease monetary policy) – further lowering interest rates to some extent.
You can also try to extend the LTROs to some extent. You could also do
some LTROs with private credit claims as collateral for instance …
That (negative interest rates) is indeed one of the possibilities.”

Coene told an audience at the European Economic and Finance Centre
here that, “I think it’s unlikely the ECB will engage in outright bond
purchases.

Inflation was one argument against bond purchases, while another
was that it would allow “profligate” governments to continue with their
bad spending habits.

Coene – who is also governor of the Belgian National Bank –
cautioned that the ECB’s non-standard policy measures did nothing to
tackle the fundamental problems of the euro zone.

–London newsroom: 4420 7862 7492; email:
wwilkes@marketnews.com/dthomas@marketnews.com

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