Visco Says ECB Will Find Solutions If Bond Shortages Emerge

  • Central bank hasn’t encountered problem in implementing QE yet
  • ECB concluded on July 21 monetary policy is effective

The European Central Bank will be able to cope with any problems that might emerge in the implementation of its asset-purchase program, Governing Council member Ignazio Visco said in an interview.

So far, policy makers have “no evidence” that there is a shortage of government bonds that may jeopardize the completion of a 1.7 trillion-euro ($1.9 trillion) quantitative easing program, Visco told Bloomberg after a meeting of G-20 finance chiefs in Chengdu, China. “We have not seen problems so far. If we find problems, we will find solutions.”

Ignazio Visco

Photographer: Alessia Pierdomenico/Bloomberg

Concerns that the ECB will run into trouble mounted after investors sought safe assets in the wake of Britain’s vote to leave the European Union, eroding the pool of QE-eligible bonds by pushing down yields. While policy makers are likely to discuss potential changes to QE at their next gathering in September, there is no reason to expect substantial alterations unless the economic outlook worsens, people familiar with the matter said after the ECB’s July 21 meeting.

“Obviously we have to understand what will be our assessment of the developments both in the price and quantities in the next months,” Visco said. “Then, we will have a very normal discussion,” he said, adding that officials “have the ability of using all our tools to reach our objective.”

Economists have floated options including lowering or removing the requirement that bonds only be bought if they have yields at or above the deposit rate, currently minus 0.4 percent; raising the share of debt issues that can be purchased; and shifting away from the requirements that debt be bought roughly in line with the economic size of each member state.

Asked whether a departure from the so-called capital key would be an option, Visco said: “It depends. We will have to see.”

Visco is also the governor of the Bank of Italy, the nation’s central bank.