–Adds on covered bonds, EMU fiscal crisis to story sent at 08:25GMT

FRANKFURT (MNI) – Criticism of the European Central Bank’s decision
to purchase government securities is understandable, but markets have no
need to worry about the bank’s independence, ECB Executive Board member
Jose Manuel Gonzalez-Paramo said Wednesday.

“I think some of these comments are understandable…these
operations are temporary, these operations will be sterilized in the
sense that one euro in means one euro out,” he told delegates at a
conference on credit risk.

The ECB’s recent moves do not weaken the bank’s mandate of
defending price stability and the ECB will “fiercely” defend its
independence, he said.

Drawing a parallel with another ECB move to shore up markets,
Paramo noted the success of the bank’s covered bond purchase program.
“We’ve seen that this program…from the beginning had an impact on the
market,” he assessed.

“We will continue to monitor the situation”, he assured.

He added that global central banks are learning from each other and
are cooperating, as shown by the reestablishment of swap lines.

“The key to the present situation in Europe is the commitment of
governments to undertake what they have to do. We are convinced that the
program in Greece will be effective. In the end it will be able to honor
its obligations,” Paramo said.

Pressed on whether he was worried about the concentration of risk
in the Eurozone, he reminded that “the ECB is not taking on risk…if
you go into the details of [Financial Stability Mechanism]…you see the
conditions are not attractive at all…I am sure we will not see a
massive concentration of risk.”

–Frankfurt bureau; +49-69-720142; tbuell@marketnews.com

[TOPICS: M$$EC$,M$X$$$,M$$CR$,MGX$$$]