GFF: ECB urges calm
26 January 2017 Luxembourg
Image: Shutterstock
Representatives from the European Central Bank (ECB) attempted to ease the concerns of the repo industry over its controversial monetary policy during the Deutsche Börse Global Funding and Financing Summit.
ECB board member and conference keynote speaker Yves Mersch acknowledged the negative effects of the central bank's "unconventional monetary policy", but argued that the European repo market, by its very nature, is procyclical and so will continue to suffer for as long as it takes for the overall economy to recover.
"The current market has made unconventional measures necessary on an unprecedented scale. But they are temporary," said Mersch.
Mersch went on to explain that, once inflation rates are back to normal in Europe, the ECB's policies can also normalise. This includes its uncharacteristic suppression of interest rates and persistent asset purchase programme.
In response to concerns raised by these policies in earlier panels, Mersch explained that the ECB has only one mandate, and that is to maintain fair pricing.
He also echoed points raised by his colleague from the previous day's session, who stated that, although unfortunate for some summit attendees, the ECB has to consider the wider markets when drafting policy.
Mersch, without offering a specific timeline, implied that the recovery is well underway and the end is in sight.
The ECB's asset purchase programme is up for review in March.
ECB board member and conference keynote speaker Yves Mersch acknowledged the negative effects of the central bank's "unconventional monetary policy", but argued that the European repo market, by its very nature, is procyclical and so will continue to suffer for as long as it takes for the overall economy to recover.
"The current market has made unconventional measures necessary on an unprecedented scale. But they are temporary," said Mersch.
Mersch went on to explain that, once inflation rates are back to normal in Europe, the ECB's policies can also normalise. This includes its uncharacteristic suppression of interest rates and persistent asset purchase programme.
In response to concerns raised by these policies in earlier panels, Mersch explained that the ECB has only one mandate, and that is to maintain fair pricing.
He also echoed points raised by his colleague from the previous day's session, who stated that, although unfortunate for some summit attendees, the ECB has to consider the wider markets when drafting policy.
Mersch, without offering a specific timeline, implied that the recovery is well underway and the end is in sight.
The ECB's asset purchase programme is up for review in March.
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