ECB Nowotny: ECB Could Re-Introduce One-Year Tender

Author: Market News International | Category: News

WASHINGTON (MNI) – The one year tender is part of the European
Central Bank’s toolbox and could be re-introduced, European Central Bank
Governing Council member Ewald Nowotny said Sunday.

The head of the Austrian National Bank also said that markets
appear to underestimate the amount of liquidity available to Eurozone
banks.

“What I am afraid is … that markets do not fully understand the
amount of liquidity provisions that comes from the ECB,” Nowotny said
during a panel discussion on the sidelines of the World Bank and IMF
Annual Meetings.

“We are in full-allotment mode … so there is not a problem of
quantity,” Nowotny said. “There may be a problem of quality with regard
to the term structure. Here we have extended the term structure already
in the last weeks.”

Noting that the ECB has in the past “had additional instruments
like providing a one-year operation, again in full-allotment mode,”
Nowotny reiterated his suggestion that this particular instrument could
be reintroduced. “This is part of out toolbox.”

“If you look at the mandate of the ECB, the ECB has a clear mandate
with regard to liquidity,” he said. However, the central bank has “no
mandate with regard to solvency of individual banks,” Nowotny added,
stressing that the ECB will should not stray from its legal mandate.

–Frankfurt newsroom +49 69 72 01 42; e-mail: frankfurt@marketnews.com

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