(Reuters) - European Central Bank Governing Council member Ardo Hansson said he would find it "problematic" to announce large-scale purchases of government bonds this month that included Greek debt.
The ECB is preparing further stimulus measures such as a quantitative easing program of large-scale government bond purchases ahead of its Jan. 22 policy meeting, when it could decide to act to address waning inflation expectations.
But Greece will hold a parliamentary election just three days later, with polls showing a lead for Syriza, a leftist party that opposes the country's international bailout program and wants to renegotiate its debt obligations.
"I'd personally find announcing a bond-buying program including Greek government bonds in January problematic," Hansson, who is the governor of Estonia's central bank, told Bloomberg in an interview conducted on Jan. 8. "...When there's a chance that somebody will come and say I'm going to restructure our debt, committing to buy such bonds is near the borderline of what could be considered."
With the assumption of sovereign credit risk also a bone of contention for Germany's Bundesbank, the ECB is looking at several options for how best to structure any sovereign debt purchases in a currency union that lacks a common fiscal regime. Hansson said he would prefer to buy corporate rather than government debt.
"The volume you could achieve is lower but I think the quality you'd achieve is much better as you don't have the concerns of monetary financing of governments, there are fewer financial stability concerns, you are not taking the pressure of governments to reform," he was quoted as saying.
Hansson was critical of the idea of just purchasing AAA-rated government bonds. But having national central banks buy government bonds deserved to be considered, he said.
"It has obvious benefits in terms of avoiding risks of mutualization of debts but would also reduce the unity of monetary policy," Hansson said.
He added that the steep drop in oil prices was "wonderful news" for most parts of the euro zone economy akin to a stimulus package, adding: "we're far from a deflationary spiral".
reuters.com
The ECB is preparing further stimulus measures such as a quantitative easing program of large-scale government bond purchases ahead of its Jan. 22 policy meeting, when it could decide to act to address waning inflation expectations.
But Greece will hold a parliamentary election just three days later, with polls showing a lead for Syriza, a leftist party that opposes the country's international bailout program and wants to renegotiate its debt obligations.
"I'd personally find announcing a bond-buying program including Greek government bonds in January problematic," Hansson, who is the governor of Estonia's central bank, told Bloomberg in an interview conducted on Jan. 8. "...When there's a chance that somebody will come and say I'm going to restructure our debt, committing to buy such bonds is near the borderline of what could be considered."
With the assumption of sovereign credit risk also a bone of contention for Germany's Bundesbank, the ECB is looking at several options for how best to structure any sovereign debt purchases in a currency union that lacks a common fiscal regime. Hansson said he would prefer to buy corporate rather than government debt.
"The volume you could achieve is lower but I think the quality you'd achieve is much better as you don't have the concerns of monetary financing of governments, there are fewer financial stability concerns, you are not taking the pressure of governments to reform," he was quoted as saying.
Hansson was critical of the idea of just purchasing AAA-rated government bonds. But having national central banks buy government bonds deserved to be considered, he said.
"It has obvious benefits in terms of avoiding risks of mutualization of debts but would also reduce the unity of monetary policy," Hansson said.
He added that the steep drop in oil prices was "wonderful news" for most parts of the euro zone economy akin to a stimulus package, adding: "we're far from a deflationary spiral".
reuters.com
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