ECB’s Emergency Powers Must Be Limited, Policy Maker Says

by birtanpublished on September 29, 2020

the ecb risks legal trouble if it tries
to extend the emergency powers of its
pandemic bond buying plan
to its other asset purchase program well
that's according to executive board
ivmesh joining us now for more is paul
gordon who leads our ecb coverage who
also spoke to
mr manchester so paul what exactly is
the significance of these comments
um i would say it feeds into a debate
that looked like it might have been
getting started there were reports
earlier this week that some governing
council members
think the powers of the pandemic
emergency purchase program
are very useful and could be used after
the pandemic crisis perhaps in the
existing asset purchase program uh merch
is uh has been at the heart of ecb
policymaking uh since
the birth of the euro he's a lawyer and
he is responsible for these
legal services and he's warning of legal
trouble if you go down
that route he's pointing out that the
governing council
always links the pandemic program and
the special powers the extra flexibility
it has
um to the pandemic that was in the
monetary policy statement it was in the
legal text that went alongside it and
it's been in every speech since so
if you decide you're going to change
tech then you run a legal risk so it's
quite significant wording from him
um paul what does the economic outlook
actually warrant
you know in terms of more stimulus would
we get more stimulus in december
yes of course i mean this doesn't rule
out the to be deciding the pandemic
program needs to be bigger
or last longer and merch doesn't isn't
prepared to go that far at the moment
um he said that the outlook um for the
economy is in line with current
projections which pretty poor
and eight percent decline in gdp this
year and only a partial rebound next
he did say there are signs that perhaps
the outlook could be a little bit better
than that
and but this all depends on the health
situation and
he what he called a major caveat to any
projections if the health
uh situation deteriorates not just
infections but also the burden on the
health service
then that could derail those scenarios
and in fact we saw today as you
uh pmi numbers coming out which were
really very poor
for the service sector which is the
biggest part of the economy in the
so that is at risk and it does mean i
would say that
more cost of eating more pandemic
purchases could yet be announced as
economists predict
in december

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