VIENNA (MNI) – ECB Governing Council member Nout Wellink on Friday
said he expects the EU’s fiscal rescue package to be sufficient to
support ailing member states.

Speaking to reporters at the sidelines of the IIF’s spring
membership meeting in Vienna, Wellink called the rescue package “very
substantial” and the E750 billion promised by the EU and the IMF “more
than enough.”

“It seems a little bit early to discuss the expansion of the
program” the Dutch central bank governor stressed. Further means would
only be needed if EU member states would “really misbehave,” he
continued, adding that “this is not my assumption.”

Wellink argued, though, that EU governments “should have stepped in
earlier” to support fiscally ailing members. Moreover, in the case of
Greece there should have been peer pressure on the country already years
ago, he said.

Still, the ECB Governing Council member said he was “grateful that
the EU stepped in massively and for a broader range of countries.” The
most important thing is that Germany decided to take part in the rescue
measures, which shows that the country is really determined to defend
the euro, he said.

Regarding the ECB’s bond purchasing program, Wellink said, “I still
think it is a good idea.” The background to that decision is that the
ECB needs to conduct its monetary policy in an environment of
functioning markets, he explained. “Our view is [that the bond
purchasing program] is necessary for the functioning of the markets.”

Asked what his opinion was on the recent spike of deposits at the
ECB, Wellink replied that this “reflects some uncertainty in the
markets.”

Commenting on the need for budget consolidation in Europe, the
central banker noted that all models show that this will have a
short-term negative impact on the economy.

However, budget consolidation can also create more confidence
amongst investors and consumers, he remarked. “The sooner you get
confidence on track, the less negative the impact of the of the budget
consolidation will be,” he said.

–Vienna desk: +49-177-724-77-39; email: twidder@marketnews.com

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