ECB’s Bini Smaghi: EMU Cannot Inflate Away Debt Problems

FRANKFURT (MNI) – Eurozone states cannot inflate away their debt
problems, European Central Bank Executive Board member Lorenzo Bini
Smaghi asserted Thursday.

In remarks not intended to signal upcoming monetary policy, the
central banker warned of the risks of providing unlimited liquidity to
banks over an extended period of time.

Yet, he countered, in remarks prepared for delivery in Bologna,
Italy, changing that policy too quickly is also not desired.

“In the euro area, the public debt problems created by the crisis
cannot be inflated away,” he said. “The Treaty rules it out. The conduct
of the ECB rules it out.”

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