–Updates story transmitted at 07:25 ET

PARIS (MNI) – Banks are relying less and less on financing from the
European Central Bank, and the ECB is phasing out its non-standard
liquidity measures, Gertrude Tumpel-Gugerell, a member of the bank’s
Executive Board, said in a brief video interview.

Tumpel-Gugerell noted that the ECB’s outstanding credit to banks
has dropped by E350 billion in the past five months. “This means banks
are much more stable and able to get their own funding. They are relying
less on the ECB. This is an important message,” she said in the
interview, posted on the website of the Fountainbleau, France-based
business school Insead.

“We are now in a period of phasing out the period of
non-conventional measures,” Tumpel-Gugerell added. “We are confident
that we are in a phase where the recovery makes it easier for banks to
continue their lending. The risks have gone down, and therefore we are
in a period where we don’t think we would need additional measures.”

The Executive Board member, an Austrian, also said, “We don’t see
[an] inflation risk at the moment. We also don’t see a deflation risk.”

Tumpel-Gugerell sought to downplay the crisis in Ireland and its
chance of spreading more widely, noting that the Irish government and
other countries in trouble now have a financial backstop in the form of
potential loans that can give them time to work through their problems.

On a broader basis, “the Eurozone is doing much better than was
expected a few months ago and even a year ago,” she said. She noted
strong recent purchasing manager indices (PMIs) and “positive” order
books. “So there’s more confidence in the system than before. We should
put that in perspective.”

Asked about the U.S. Federal Reserve’s recent decision to launch
another round of quantitative easing, Tumpel-Gugerell said only that
“each central bank has to take the measures it sees as adequate for its
region and its area of responsibility.”

She downplayed talk of a possible Eurozone collapse, saying “the
majority of people are confident that the euro has served them well.”

She noticed that the euro has been useful in fostering trade within
Europe and that some people also view it as a good instrument for
preserving their wealth in the future.

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