European Central Bank executive board member Lorenzo Bini Smaghi said any decision on the ECB buying more government bonds has to be taken “on the basis of circumstances,” Die Zeit reported, citing an interview.
The central bank can’t ignore the fact that in the current crisis “markets are dysfunctional” and that’s why the ECB implemented the Securities Markets Program, Smaghi told the newspaper, according to an e-mailed version of the interview.
“Our target is to achieve price stability and to implement a single monetary policy for the euro area as a whole,” Smaghi said, when asked if the ECB would buy more bonds. “There is no single monetary policy, if interest rates, not only for government, but also for corporates and households, in certain countries spiral out of control.”
Smaghi, who is stepping down from the ECB’s executive board, said German fears that “aggressive action” by the central bank leads to inflation is “wrong, based on simple economic analysis,” the newspaper said.
Asked by Die Zeit whether Italy can save itself, Smaghi said “it can, and it must,” according to the article, adding that “markets need to be convinced quickly.”
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