VIENNA (MNI) – At present, there is no need for the European
Central Bank to introduce new measures to support the euro, European
Central Bank Governing Council member Ewald Nowotny said Monday.

The position of the euro versus the dollar is within a normal range
at the moment and does not pose a problem for policy makers, he said.

“The trend” of the euro/dollar exchange rate is “fully
unproblematic,” the head of Austria’s National Bank remarked at a press
conference. He also assured that the stability of the currency is “not

“Of course we at the ECB have always said that we are against
sharp, strong moves” in the value of the euro, but at the present time
“we do not see any reason to implement measures” to counteract the
euro’s slide, Nowotny said.

“On Spain I cannot comment,” Nowotny said when pressed about recent
reports that the fiscally embattled Iberian nation will be the next to
tap EMU/IMF support funds. “It is an issue for the Spanish government,”
he insisted.

Earlier today, the European Commission denied German media reports
that Commission President Jose Manuel Barroso and ECB President
Jean-Claude Trichet were calling for some of the E750 billion EU/IMF
stability fund to go to Spain.

Taking a position with echos of the Obama adminisration’s desire to
separate retail and commercial banking from market investment, Nowotny
said that trading in the market was not a central activity in banking
and that it made sense to limit certain activities of banks.

He also reiterated that the point of the ECB’s decision to purchase
government bonds “is to make non-functioning markets functional.”

“It is not quantitative easing,” he said, noting that all of the
liquidity created by the bond purchases will be sterilized.

Nowotny said that budget consolidation is “important” even if such
actions imply risks to short-term growth.

Nevertheless, consolidation is “necessary for secure, stable
long-term growth,” he added. Furthermore, the costs of not stabilizing
the fiscal situation are higher than those of stabilizing finances.

Nowotny said that regulators needed to “remain tough” in the fight
for stronger bank regulations, despite efforts from the banking sector
to block new rules.

“Trading activities are not a central economic area of the banking
industry,” he noted.

He conceded that it made sense to limit some financial activities,
and even “in a few areas one can speak of prohibitions.” In discussing
Germany’s ban on naked short-selling of certain financial products,
Nowotny said that “of course it is better” when such moves are agreed to
internationally, but he pointed to the slow decision making process of
certain international bodies as a reason for such unilateral action.

–MNI Vienna: +49-173694-7935;

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