FRANKFURT (MNI) – The European Central Bank’s new bond-buying
program OMT does not go beyond the central bank’s mandate, ECB Governing
Council member Ewald Nowotny said in a live online chat with Austria’s
Die Presse.com on Tuesday.

“I am operating on the assumption that the bond-buying program does
not contravene EU law,” he wrote. “But it should be noted that specific
conditions must be met for the program to be activated, in particular,
it can only be used in conjunction with the ESM programs.

“In the view of the ECB and in my view, the ECB is acting fully
within the framework of its mandate,” Nowotny said, noting that any
possible bond market interventions are aimed at restoring the monetary
transmission mechanism of the ECB’s policy stance within the Eurozone.

Nowotny said that there is currently no discussion of a negative
leading interest rate and that he could “hardly imagine” a main
refinancing rate below zero. He did not comment on the possibility of a
negative deposit rate.

He reiterated that any new bonds buys will hinge on strict
conditionality. “In this sense one cannot say that the program is
unlimited,” he said.

Asked whether the ECB is not wading deeply into fiscal territory by
hinging support measures on previous government action, Nowotny stressed
that he supports a strict separation between fiscal and monetary policy.
“The measures of the ECB are exclusively in the area of monetary
policy,” he said.

“However, (for ECB measures) to become effective, especially in
problem countries, independent measures in the area of structural and
fiscal policies are needed. This is the responsibility of the relevant
political authorities that the ECB cannot and does not want to replace.”

Nowotny maintained that the euro continues to fulfill its functions
and that the crisis is one of “individual member states” that must
ultimately solve their problems.

Nowotny also said he was “cautious” about the idea of releasing
minutes of the ECB Governing Council meetings, warning it could lead
national central bank governors to keep a closer eye on national
political demands.

“The decisions of the (ECB) Governing Council must be oriented
around the demands of the entire euro area. Releasing (the minutes)
too quickly entails the risk of a ‘renationalization’ of the decision
making process. The current release lag of 30 years is certainly too
long, but a speedy release could also lead to problematic political
pressure,” he said.

— Frankfurt bureau: +49 69 720 142; email: frankfurt@mni-news.com —

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