FRANKFURT (MNI) – The European Central Bank’s government bond
buying program has effectively been halted but the facility should
remain in place as a precautionary measure, ECB Governing Council member
Ewald Nowotny said in an interview with Reuters Insider TV on Tuesday.
“As data show, the bond buying programme has been reduced to more
or less zero, but it makes sense to be in place as a security measure,”
Nowotny said.
While “for the time being, markets do function on their own,”
Nowotny said that “it makes sense to keep this institutional structure
because it may make sense to observe developments for some time to
come.”
Nowotny also said that European banking stress tests are a serious
exercise and should have a positive impact on markets.
“These stress tests that we are doing are very serious. They are
based on very strict assumptions, so I think the results of these tests
have to be taken quite seriously,” Nowotny said.
He warned against making a direct link between ECB liquidity policy
and results of the stress tests.
“What we have now is an organized stress test and then we have the
government reaction to these results…Then at the ECB we will have to
look at how markets are developing and then we will have to act
accordingly,” Nowotny said.
MORE
–Frankfurt newsroom +49 69 72 01 42; e-mail: jtreeck@marketnews.com
[TOPICS: M$$EC$,M$X$$$,M$$CR$,MGX$$$]