VIENNA (MNI) – The recently floated proposal to create a European
Debt Agency that would issue joint Eurobonds is an interesting one but
now is not the right time to be talking about it, European Central Bank
Governing Council member Ewald Nowotny said Friday.
Instead, the priority for EU leaders should be to establish a
long-term European Stability Mechanism, and they should do it “quickly,”
Nowotny, who is governor of the Austrian National Bank, said in a press
conference.
“These are interesting ideas,” he said of the Eurobond proposal.
“From my intellectual past — and I hope also present — I don’t exclude
that one must also consider long term things. But one must not confuse
the long-term concerns with the current political needs. Otherwise there
is confusion.”
He added: “We shouldn’t overburden this discussion with things that
are interesting, but that at the moment are not relevant.”
Nowotny said that Eurozone finance ministers’ plan for a new
permanent bailout facility that stipulates a procedure for potential
private creditor burden sharing in the case of a default will be
examined to determine whether it really would require a change to EU
treaties.
But he seemed to suggest it could be done without too much of a
fuss. “This is not something that we didn’t have before,” he said,
echoing the comments of other ECB and EU officials that the procedures
for debt restructuring outlined in the plan adhere to currently accepted
doctrine. “This is definitely not a question that could be sensibly
dealt with through referendum,” he added. “I would say, no, this is
something that must be dealt with quickly.”
Nowotny also made clear he was not concerned by recent moves in the
euro’s exchange rate. “The euro is not really under pressure,” he said.
“There are currently fluctuations within a normal range.”
While the current crisis is seriously, it should not be seen “as a
danger to the foundations of the euro,” he said. “From an economic point
of view, I see no danger. But one must remember that markets do not
always react rationally.”
Nowotny also said he expected no changes to ECB policy, either on
interest rates or liquidity operations, in the medium-term. But
eventually, the ECB is intent on ending the emergency liquidity
measures, he said.
“Unconventional measures are not standard measures and are
something that we would like to remove,” he said. However, “over the
middle term we do not have plans to make changes. This applies to
liquidity measures as well as interest rate policy.”
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