ECB's Coeure: QE 'Has To Be Big'
ECB to Decide Scale of QE Next Week: Benoit Coeure
Speaking for the French newspaper Liberation on Friday, ECB Executive Board member Benoit Coeure (pictured) said that the European Central Bank (ECB) will decide next week on the size of a planned sovereign debt purchase.
"We will take the American and British experiences into account in order to determine the amount of debt to buy, so as to reestablish confidence and bring inflation back to a level close to and lower than 2%, while keeping in mind the institutional specificities of the eurozone," Coeure told the paper.
"We should also decide if the purchase would concern the debt of certain countries or if it should be balanced across the entire eurozone," he added.
The French board member pointed out that the aim of the ECB stimulus measure is to "ensure confidence in the capacity of the central bank to stabilize inflation".
Coeure said that there was an increasing risk that "growth and inflation remain constantly weak, that we slump into an 'economy of 1% - growth at 1% and inflation at 1%."
"This prospect is sufficiently dangerous for us to be worried about," he stressed.
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The European Central Bank's (ECB) potential government bond-buying program must be massive to be efficient, the bank's Executive Board member Benoit Coeure said on Friday in an interview with the Irish Times.
"For it to be efficient, it has to be big," Coeure cautioned in the interview published on the ECB's website. "How big is big enough? This has to be an informed decision based on what we know are the transmission channels."
"So we have to make the case in a convincing way that we have the resolve and the instrument to move the European economy out of the low growth, low inflation situation before it becomes a trap," he went on. "And then all institutions have to contribute according to their mandate. The ECB has a mandate which has to do with inflation. We certainly have to act and show in a convincing way that we have instruments to act to deliver on our mandate."
His comments came at a particularly busy time within the ECB, whose divided governors are examining a new scheme to buy up euro zone sovereign bonds in a bid to avert deflation. Markets believe the QE program will be announced as soon as next week, at the rate-setting committee meeting on January 22.
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