Purchasing government debt comes with legal obstacles and it is no panacea for the eurozone economy, said ECB governing council member Jens Weidmann.
“There is a prohibition of monetary financing in the treaties that puts up high legal hurdles, and for good reason,” Weidmann said in Madrid.
The debate about quantitative easing “is distracting our attention from the true problems,” he said.
His comments come after ECB president Mario Draghi last week explicitly cited government bond-buying as a possible policy tool and said officials will do what they must to raise inflation expectations as quickly as possible. The ECB’s 24-member governing council gathers in Frankfurt next week and will announce its monetary policy decision on December 4.
“There seems to be a conception that there is one silver bullet out there which is buying sovereign debt and once we embark on this this will save Europe from the low growth rates, from all our problems,” said Mr Weidmann.
Officials including vice president Vitor Constancio, Dutch governor Klaas Knot and Austria’s Ewald Nowotny have stepped up their language to signal opposition to purchasing government debt anytime soon.
Policy makers should first assess the effects of current measures such as targeted longer-term loans and purchases of covered bonds and asset-backed securities before acting again, they’ve said.
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