BERLIN (MNI) – The ECB’s recent two long-term refinancing
operations (LTROs) cannot on their own solve the Eurozone’s sovereign
debt crisis but can buy time for governments to undertake the necessary
steps, ECB Executive Board member Joerg Asmussen said Friday.
“Did the LTROs solve the current problems?” Asmussen asked in a
speech at a conference of the Institute for New Economic Thinking here.
“No, and this wasn’t intended; it bought time for governments to act.”
“We have done our part, providing an environment of ample liquidity
and low interest rates, and now it is time for governments to do their
part,” the central banker stressed.
European governments have now a “clear, comprehensive strategy to
deal with the situation,” Asmussen reckoned. “Europe is a safe place to
invest.”
“The best contribution a central bank can make is to provide price
stability and to contribute to financial market stability,” he
reaffirmed. “We remain fully faithful to our mandate.”
Asmussen repeated the ECB’s current scenario of Eurozone growth
stabilizing at low levels and inflation remaining in check. “In the
environment of modest growth, price pressures should remain limited,” he
said.
“Inflation expectations are well anchored,” the board member
observed. The ECB will continue to deliver price stability and “will act
when needed.”
Downside risks for growth stem from the possibility that tensions
in Eurozone sovereign debt markets may reappear and spill over to the
real economy, Asmussen said.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
[TOPICS: M$G$$$,M$$EC$,MGX$$$,MFX$$$,M$X$$$,MT$$$$,M$$CR$]
