In the Media | November 2012

ECB's Constancio Expects Spain to Apply for OMT

By Harriet Torry, November 26, 2012. ©, Inc. All Rights Reserved.

BERLIN—European Central Bank Vice President Vitor Constancio expects Spain to apply for the ECB's new bond-buying program, known as "Outright Monetary Transactions," he said after a speech in Berlin on Tuesday.

In his speech at a conference held by the Levy Economics Institute, he said countries can only qualify for OMT if they meet strict conditions.

Asked about the outcome he expects from the meeting of Greece's international creditors in Brussels later Monday, Mr. Constancio said he sees no grounds for a haircut of publicly held Greek sovereign debt, although he does expect agreement on disbursing the next tranche of aid.

He also said the ECB is ready to assume its role in the supervision of the proposed banking union, the "most urgent pillar of a stable European monetary union.

A closer financial union would allow the ECB to exit its current exceptional measures, Mr. Constancio said.

"For us to contemplate exit from the exceptional measures, which we will do some time in the future, depends on several aspects, not just the progress of financial integration, it also depends on the overall economic conditions that affect inflation risks," the central banker told reporters after his speech.

"If and when the economic conditions change, that would be the moment to change also the unconventional policies," he added.

Economic growth in the euro area has slowed, and Mr. Constancio said he doesn't see visible risks to inflation on the horizon, "so we continue with our stance on monetary policy.

"Our policy is already very accommodative," Mr. Constancio said when asked whether interest rates could change.

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