No need for more massive ECB intervention: Noyer
The situation in the eurozone does not justify a greater intervention by the European Central Bank in buying up eurozone government debt, Bank of France chief Christian Noyer said Friday.
"There is no need for something more massive," said Noyer, who also sits on the ECB's governing council, noting that at its Thursday policy meeting it had decided to step up liquidity to commercial banks which should allow them to buy eurozone government debt.
ECB president Mario Draghi on Thursday dashed investors' hopes that the bank would massively step up its purchase of eurozone sovereign bonds, which would help bring down borrowing rates and ease tension on the market.
Draghi said ECB action purchases of sovereign bonds of debt-wracked countries was "limited" and "temporary".
A week earlier some of his comments were interpreted as indicating the ECB could step up bond purchases if eurozone countries adopted tighter rules on deficits and debt.
Bank of France chief Noyer said he was disappointed there was "total confusion on this issue" but said not all central banks took on the role of lending to governments.
He said the ECB announced "very spectacular measures to reinforce the liquidity of banks" at its Thursday meeting.
The ECB said would offer banks three-year loans whereas it previously only offered funds up to one year and eased the requirements on the collateral they must put up for the money.
It also cut by half the amount of money commercial banks need to keep at the ECB.
These measures should allow banks "to do their job, to continue lending to the economy and when there is need, buy the debt of sovereign states," said Noyer.
© 2011 AFP