Asmussen Says Crisis Lull Shouldn’t Invite Complacency
European Central Bank Executive Board Member Joerg Asmussen said that a lull in financial-market tensions after the ECB unveiled its bond-purchase program doesn’t mean countries should put off reform measures.
“The market reaction to our announcement has been positive,” Asmussen told reporters in Nicosia today after a meeting of European Union finance ministers. “This is obviously welcome but this is no reason for complacency.”
President Mario Draghi said earlier that there’s cause for optimism in Europe after the rally in financial markets. ECB policy makers on Sept. 6 agreed on an unlimited bond-buying program aimed at regaining control of interest rates in countries such as Spain and Italy.
“One should not unduly wait with any action just simply because one thinks waiting is an option because markets have been relatively benign in the past week,” Asmussen said. “One should not wait before taking the necessary steps, this is true for all governments concerned in order to improve fiscal discipline, improve competitiveness and where necessary, to clean up banks’ balance sheets.”
Under the ECB plan, dubbed Outright Monetary Transactions, the central bank may buy bonds with a maturity of up to three years on the secondary market of countries that ask Europe’s bailout fund to purchase their debt on the primary market.
“We have recognized that government yields in countries under pressure have declined quite substantially and in addition, we have seen a flattening of the yield curve in the countries possibly concerned with OMTs,” Asmussen said.
Draghi also noted the improvement in financial market conditions, when asked earlier on how much time the ECB has created through its crisis response.
“Financial conditions have been better recently, but we have to continue working on that,” Draghi said. “If we continue going this way, one has to be optimistic.”
To contact the reporter on this story: Jeff Black in Nicosia at firstname.lastname@example.org
To contact the editor responsible for this story: Craig Stirling at email@example.com