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☆ ECB's Schnabel defends smaller balance sheet as debate heats up
▼ + stars: | 2023-12-05 | by ( Balazs Koranyi | ) www.reuters.com time to read: +4 min

She said her "demand-driven" approach fitted the euro zone, whose 20 countries vary in economic strength and have separate banking systems. "A demand-driven system is well-suited for a heterogeneous currency union that may be prone to fragmentation," Schnabel said in an interview. "Such a system also likely limits the size of the central bank balance sheet." She conceded, however, that "it could make sense to have a mix of different tools", suggesting policymakers may be looking for a compromise in this complex yet crucial debate for the euro zone financial system. Loans to banks or a structural bond portfolio would come on top of this.

Persons: Isabel Schnabel, Ralph Orlowski, Schnabel, Philip Lane, Schnabel's counterargument, Francesco Canepa, Catherine Evans Organizations: Frankfurt, Banking Congress, Old Opera, REUTERS, European Central Bank, ECB, Reuters, Federal Reserve, Bank of England, Thomson Locations: Frankfurt, Germany, FRANKFURT

"It is hard to understand how the ECB ended up buying the bonds of property companies, while at the same time warning of the risks of property price inflation," former ECB chief economist Otmar Issing told Reuters. But data this week shows the central bank still owned the two bonds issued by SBB as of Nov. 24. While Sweden is not in the euro zone, SBB issued the debt bought by the ECB in neighbouring Finland, which is. Alongside the SBB bonds, the ECB also hoovered up the debt of other property companies which have since hit problems, including Sweden's Heimstaden. The ECB also gobbled up many German real estate bonds, including 39 issued by Vonovia, which has been selling property to cut debt.

Persons: Otmar Issing, Daniel Gros, Gros, Sweden's, Heimstaden, it's, Alexander Smith Organizations: SBB, European Central Bank, ECB, Reuters, Research, Institute, European, Bocconi University, Fitch, Vonovia, Thomson Locations: FRANKFURT, Europe, Germany, Sweden, Milan, Swedish, Finland

☆ Euro zone's shadow banks face risk of margin calls, ECB says
▼ + stars: | 2023-11-22 | by ( ) www.reuters.com time to read: +2 min

FRANKFURT, Nov 22 (Reuters) - Euro zone shadow banks face the risk of receiving large margin calls or client redemptions they cannot meet because they do not have enough cash on hand, the European Central Bank (ECB) said on Wednesday. The ECB said liquidity buffers among shadow banks - an umbrella term for funds, insurers and other non-bank financial intermediaries (NBFI) - were "very low", exposing them to the risk of running out cash at times of market stress. Insurance companies and pension funds (ICPF) that use derivatives could be exposed to the risk of "large margin calls", the ECB added, citing those suffered by their UK peers last year as a precedent. "Any sharp increase in sovereign bond yields or a spike in financial market volatility could expose those ICPFs which use interest rate derivatives to large margin calls," the ECB said. The central bank reiterated its call for introducing regulation for shadow banks like the one that governs traditional lenders, including liquidity requirements and stress tests.

Persons: Francesco Canepa, Mark Potter Organizations: European Central Bank, ECB, Insurance, Thomson Locations: FRANKFURT

☆ Global watchdog FSB to tackle funds' liquidity mismatch - Knot
▼ + stars: | 2023-11-16 | by ( ) www.reuters.com time to read: +1 min

Financial Stability Board (FSB) Chair Klaas Knot arrives for the G20 Leaders' Summit in Bali, Indonesia, November 15, 2022. Mast Irham/Pool via REUTERS Acquire Licensing RightsFRANKFURT, Nov 16 (Reuters) - The Financial Stability Board, a global risk watchdog, plans to issue new liquidity recommendations for some investments funds after bouts of stress in recent years risked spreading over to the broader financial sector, the head of the FSB said on Thursday. "Looking ahead, we will soon issue policy recommendations to address liquidity mismatches in open ended funds," Klaas Knot, the head of the FSB and the governor of the Dutch central bank said in a speech on Thursday. Open-ended investment funds tend to sit on long term assets but their investors often have the option for short-term redemptions, creating a liquidity mismatch in periods of high stress. FSB recommendations are not binding but serve as vital guidelines for local regulators and supervisors setting ground rules.

Persons: Klaas Knot, Mast, Klaas, Balazs Koranyi, Francesco Canepa Organizations: REUTERS Acquire, Rights, Thomson Locations: Bali , Indonesia, Dutch

☆ ECB backs global rules for bonds wiped out in Credit Suisse rescue
▼ + stars: | 2023-11-16 | by ( ) www.reuters.com time to read: +2 min

A view shows the logo of the European Central Bank (ECB) outside its headquarters in Frankfurt, Germany March 16, 2023. REUTERS/Heiko Becker//File Photo Acquire Licensing RightsFRANKFURT, Nov 16 (Reuters) - The European Central Bank's chief supervisor on Thursday supported creating global standards for convertible bonds that were wiped out as part of Credit Suisse's rescue by rival UBS (UBSG.S) earlier this year. The Basel Committee said in a report last month it would review the features of AT1 bonds, including the "loss-absorbing hierarchy". But Credit Suisse's bonds contained a clause allowing authorities the write down those bonds without winding down the bank. This clause is not a feature in bonds issued by European Union banks and the ECB has made clear that it would impose losses on shareholders first.

Persons: Heiko Becker, Andrea Enria, Enria, Pablo Hernández de Cos, Francesco Canepa, Balazs Koranyi, Toby Chopra Organizations: European Central Bank, REUTERS, Rights, Central Bank's, UBS, ECB, Banking Supervision, Basel, Committee, European Union, Thomson Locations: Frankfurt, Germany, Swiss, Basel

☆ EU banks may face major hit if they need to sell bonds -Lagarde
▼ + stars: | 2023-11-16 | by ( ) www.reuters.com time to read: 1 min

International Monetary Fund (IMF) Managing Director Christine Lagarde delivers a speech at the U.S. Chamber of Commerce in Washington, U.S., April 2, 2019. REUTERS/Kevin Lamarque/File photo Acquire Licensing RightsFRANKFURT, Nov 16 (Reuters) - European banks may suffer significant losses if they need to sell their bond holdings to raise cash, the European Central Bank's President Christine Lagarde said on Thursday. "EU banks’ holdings of fixed income securities could be marked down quite significantly, should they need to be sold," she told the annual conference of the European Systemic Risk Board, which she chairs. Reporting by Francesco Canepa; editing by Jason NeelyOur Standards: The Thomson Reuters Trust Principles.

Persons: Christine Lagarde, Kevin Lamarque, Francesco Canepa, Jason Neely Organizations: Monetary Fund, U.S . Chamber of Commerce, REUTERS, Rights, Central Bank's, Thomson Locations: Washington , U.S

☆ Euro zone banks lose millions of euros to poor IT outsourcing
▼ + stars: | 2023-11-15 | by ( ) www.reuters.com time to read: +2 min

This last area in particular cost banks 148 million euros ($160.59 million) in 2022, a 360% increase from the year before, as a result of the "unavailability or poor quality of outsourced services". While the ECB cautioned these losses were "concentrated within a few significant institutions and therefore not indicating a sectoral trend", it also found that banks' "outsourcing arrangements often failed to sufficiently address IT security requirements". Banks are making ever greater use of outsourcing as they switch to cloud-based services from storing information on their own servers. Their cloud expenses surged by 56% in 2022 to account for 3.1% of all money spent by banks on IT, the ECB said. More broadly, the ECB found fundamental shortcomings that were "more severe and widespread than expected" in how banks tackle cybersecurity.

Persons: Dado Ruvic, Banks, Francesco Canepa, Angus MacSwan Organizations: REUTERS, Rights, European Central Bank, ECB, Thomson

☆ EU loophole lets banks dodge ECB's crypto supervision, needs fixing -Enria
▼ + stars: | 2023-11-14 | by ( ) www.reuters.com time to read: +3 min

He warned the EU's framework placed banks' activity as a 'crypto-asset service provider' -- such as acting as a custodian for customer wallets, exchanging tokens or managing crypto portfolios -- outside of the ECB's purview as a banking supervisor. "In fact, if crypto-asset service providers controlled by banks are not within the scope of their prudential consolidation, the BCBS standard and especially the exposure limit may become ineffective." He added crypto asset service providers should be added "as a matter of urgency" to the list of financial institutions that the ECB supervises under EU rules. MiCAR entered into force at the end of June and will take full effect by the end of next year. The Basel Committee's global standards on exposures to crypto assets are due to be transposed into EU law by Jan. 1, 2025.

Persons: Dado Ruvic, Andrea Enria, Enria, MiCAR, Jan, Claudia Buch, Francesco Canepa, Susan Fenton Organizations: REUTERS, Rights, Central Bank's, Banking, ECB, prudential, EU, Thomson Locations: EU, Venice, Basel

☆ Euro zone should not ease bank buffers, ECB says
▼ + stars: | 2023-11-13 | by ( ) www.reuters.com time to read: +2 min

European Central Bank (ECB) Vice-President Luis de Guindos arrives at the Presidential Palace for a meeting with Cyprus President Nikos Christodoulides in Nicosia, Cyprus, October 4, 2023. REUTERS/Yiannis Kourtoglou/File Photo Acquire Licensing RightsFRANKFURT, Nov 13 (Reuters) - Euro zone economic growth will remain weak in the near term as services and the labour market weaken but nations in the bloc should not free discretionary bank buffers to ease the pain, European Central Bank Vice President Luis de Guindos said. A potential concern is that the euro zone economy has been broadly stagnating all year and any recovery next year will be shallow, keeping growth below 1%. "It is likely that the euro area economy will remain subdued in the near term." On the prospects for interest rates, de Guindos said the ECB would have more information in December "to reassess the inflation outlook and required policy action".

Persons: Luis de Guindos, Nikos Christodoulides, Yiannis, de Guindos, Guindos, Balazs Koranyi, Francesco Canepa, Emelia Sithole Organizations: European Central Bank, Cyprus, REUTERS, Rights, ECB, Thomson Locations: Nicosia, Cyprus, Germany, France, Netherlands

☆ Centeno says outgoing Portugal PM only invited him to ponder on premiership
▼ + stars: | 2023-11-13 | by ( Sergio Goncalves | ) www.reuters.com time to read: +2 min

LISBON, Nov 13 (Reuters) - Bank of Portugal Governor Mario Centeno, who is under fire from the opposition over an invitation by the outgoing prime minister to replace him as premier, said on Monday he never accepted the offer but was just asked to ponder on the matter. Portuguese opposition parties on Friday argued that such an invitation compromised the political independence of a central bank governor. The Bank of Portugal's ethics committee is expected to meet on Monday to evaluate his conduct. Prime Minister Antonio Costa stepped down on Tuesday over an investigation into alleged illegalities in his government's handling of lithium and hydrogen projects and a large-scale data centre. Centeno announced his departure from the finance ministry in June 2020, during Costa's second term, and was nominated to head the bank a month later.

Persons: Mario Centeno, Antonio Costa, illegalities, Costa, Marcelo Rebelo de Sousa, Centeno, Rebelo de Sousa, Olli Rehn, Balazs Koranyi, Francesco Canepa, Andrei Khalip, Bernadette Baum Organizations: Bank of Portugal, Socialist, European Central Bank policymaker, Bank of, ECB, Thomson Locations: LISBON, Portuguese, Bank of Portugal, ECB's, Finland, Frankfurt

☆ UniCredit, RBI among banks on hook for $2.4 bln in Signa loans -source
▼ + stars: | 2023-11-09 | by ( Alexandra Schwarz-Goerlich | ) www.reuters.com time to read: +3 min

RBI, which the person said had sharply reduced its exposure to the Signa group in recent years, declined to comment on Thursday. The European Central Bank (ECB), which supervises the banks, declined to comment. Raiffeisen Landesbank Niederoesterreich-Wien, Raiffeisen Landesbank Oberoesterreich and Erste Group are also among the banks with exposures to Signa, the person said. The other two Austrian banks declined to comment. A spokesperson for Austria's central bank said it had no concerns about the country's financial stability, when asked about Signa's financial position.

Persons: UniCredit, Signa, Rene Benko, Fitch, Landesbank, Banks, Arndt Geiwitz, Francesco Canepa, Tom Sims, Elisa Martinuzzi, Alexander Smith Organizations: Signa Group, Chrysler, Raiffeisen Bank, Bank, European Central Bank, ECB, Reuters, Erste Group, Erste, Austria's National Bank, Market Authority, Thomson Locations: VIENNA, Banks, Austria, Bank Austria, Wien

☆ ECB tells banks to factor in further drop in property prices
▼ + stars: | 2023-11-07 | by ( ) www.reuters.com time to read: +2 min

A view shows the logo of the European Central Bank (ECB) outside its headquarters in Frankfurt, Germany March 16, 2023. REUTERS/Heiko Becker/File Photo Acquire Licensing RightsFRANKFURT, Nov 7 (Reuters) - Euro zone banks should factor in the risk of a further fall in property prices when they make provisions and plans about their capital, the European Central Bank's chief supervisor Andrea Enria said on Tuesday. The European property market has come under pressure from the ECB's steepest and longest streak of increases in interest rates, which are now at record highs. Fuelled by low interest rates and massive ECB cash injections, billions were funnelled into property in the last decade, particularly in richer European countries such as Germany, France and the Netherlands. Euro zone banks have been curbing access to credit, particularly mortgages, and demand from households and companies is also falling, ECB data shows.

Persons: Heiko Becker, Andrea Enria, Enria, Banks, Germany's Claudia Buch, Francesco Canepa, Kirsten Donovan, Jan Harvey Organizations: European Central Bank, REUTERS, Rights, Central Bank's, ECB, Thomson Locations: Frankfurt, Germany, France, Netherlands

☆ ECB's Nagel says inflation has not been defeated yet
▼ + stars: | 2023-10-31 | by ( ) www.reuters.com time to read: +1 min

Joachim Nagel, Bundesbank president and European Central Bank policymaker, prepares for an interview at the Jackson Lake Lodge in Jackson Hole, Wyoming, where the Kansas City Fed holds its annual economic symposium, August 24, 2023. REUTERS/Ann Saphir/File photo Acquire Licensing RightsFRANKFURT, Oct 31 (Reuters) - The European Central Bank must keep interest rates sufficiently high for long enough because inflation in the euro zone has not been conquered despite a significant fall in the past year, ECB policymaker Joachim Nagel said on Tuesday. "Our tight monetary policy is working, but we must not let up too soon," Nagel, the Bundesbank's president, said in remarks prepared for delivery at an economic think-tank in Berlin. "Rather, the key interest rates will have to remain at a sufficiently high level for a sufficiently long time." Reporting By Francesco Canepa Editing by Tomasz JanowskiOur Standards: The Thomson Reuters Trust Principles.

Persons: Joachim Nagel, Ann Saphir, ECB policymaker Joachim Nagel, " Nagel, Francesco Canepa, Tomasz Janowski Organizations: European Central Bank policymaker, Kansas City Fed, REUTERS, Rights, European Central Bank, ECB, Thomson Locations: Jackson, Jackson Hole , Wyoming, Berlin

☆ Euro zone inflation drops to lowest in over two years
▼ + stars: | 2023-10-31 | by ( ) www.reuters.com time to read: +1 min

FRANKFURT, Oct 31 (Reuters) - Euro zone inflation dropped to its lowest level in over two years in October, as energy prices fell and the high interest rates set by the European Central Bank dampened demand, a preliminary reading showed on Tuesday. Prices grew by 2.9% year on year in October, the slowest pace since July 2021, from 4.3% a month earlier, according to Eurostat's flash estimate. Inflation started falling sharply last month as the massive increase in energy prices recorded a year earlier impacted the annual comparison. A measure of inflation that excludes energy, food, alcohol and tobacco also declined - to 4.2%, the lowest level since July 2022, from 4.5%. All components in the inflation basket recorded smaller increases than a month earlier, although the slowdown was minimal in services, at 4.6% from 4.7%, probably as a result of rising wages.

Persons: Francesco Canepa, John Stonestreet Organizations: European Central Bank, ECB, Thomson Locations: FRANKFURT

☆ Euro zone inflation, growth slow as ECB hikes weigh
▼ + stars: | 2023-10-31 | by ( Francesco Canepa | ) www.reuters.com time to read: +2 min

Summary Euro zone inflation lowest since July 2021 in OctGDP shrinks slightly in Q3FRANKFURT, Oct 31 (Reuters) - Inflation in the euro zone hit a two-year low a month after its economy began contracting, data showed on Tuesday, illustrating the dual impact of a steady diet of European Central Bank's interest rate hikes. But the brisk decline from the double-digit figures of just a year ago is coming at a cost: the euro zone economy dipped by 0.1% in the three months to September, according to a separate Eurostat release, and is flirting with a recession. "The data leaves the ECB firmly on hold," Dirk Schumacher, an economist at Natixis, said. "It's now down to weaker demand grinding down inflation and that's a slow process," Natixis' Schumacher said. "Still, continued economic and geopolitical uncertainty alongside the impact of higher rates on the economy will weigh on economic activity in the coming quarters."

Persons: Dirk Schumacher, It's, Natixis, Schumacher, Bert Colijn, Francesco Canepa, John Stonestreet Organizations: ECB, ING, Thomson Locations: FRANKFURT, European

☆ ECB keeping up pressure on banks to loosen ties with Russia -Enria
▼ + stars: | 2023-10-30 | by ( ) www.reuters.com time to read: 1 min

FRANKFURT, Oct 30 (Reuters) - The European Central Bank has kept up pressure on banks to loosen ties with Russia but it knows that it is not easy to secure approval from local authorities, ECB supervisor Andrea Enria said in an interview published on Monday. "We continue putting pressure on banks to downsize and potentially exit," Enria told the Financial Times. "We acknowledge that there are legal constraints and that, in order to exit the business, you need to find suitable buyers and you need to get an approval from the local authorities in Russia, which is not always easy." Reporting by Francesco Canepa; editing by Jason NeelyOur Standards: The Thomson Reuters Trust Principles.

Persons: Andrea Enria, Enria, Francesco Canepa, Jason Neely Organizations: European Central Bank, Financial Times, Thomson Locations: FRANKFURT, Russia

☆ ECB breaks record streak of rate hikes as economy weakens
▼ + stars: | 2023-10-26 | by ( ) www.reuters.com time to read: +2 min

A view shows the logo of the European Central Bank (ECB) outside its headquarters in Frankfurt, Germany March 16, 2023. REUTERS/Heiko Becker/File Photo Acquire Licensing RightsATHENS, Oct 26 (Reuters) - The European Central Bank broke the longest streak of interest rate hikes in its 25-year history on Thursday, saying the latest data continued to point to inflation slowly coming down to its 2% target. "The Governing Council’s past interest rate increases continue to be transmitted forcefully into financing conditions," the ECB said. This sharp policy tightening is leaving a mark on the economy, with data earlier this week showing weak credit creation and economic activity. ($1 = 0.9480 euros)Reporting By Leftheris Papadimas Writing by Francesco Canepa Editing by Catherine EvansOur Standards: The Thomson Reuters Trust Principles.

Persons: Heiko Becker, Christine Lagarde's, Francesco Canepa, Catherine Evans Organizations: European Central Bank, REUTERS, Rights, ECB, Thomson Locations: Frankfurt, Germany

European flags are seen in front of the European Central Bank (ECB) building, in Frankfurt, Germany, July 21, 2022. Price pressures are easing and the economy is slowing to a point that a recession may already be underway, making any further rate hikes increasingly unlikely. Meeting in Athens for the first time in over a decade, the Governing Council is expected to have an easy time deciding on rates. Others argue that growth prospects are deteriorating so quickly that the ECB would be better served with a "neutral" guidance, emphasizing data dependency. This suggests that any change in the scheme will be gradual, so the ECB can protect Italy as long as possible.

Persons: Wolfgang Rattay, Martin Wolburg, Wolburg, Frederik Ducrozet, reinvestments, Balazs Koranyi, Emelia Sithole Organizations: European Central Bank, REUTERS, ECB, Generali Investments, Wealth Management, Thomson Locations: Frankfurt, Germany, FRANKFURT, Athens, Italy

☆ Weak euro zone lending adds to recession fears
▼ + stars: | 2023-10-25 | by ( ) www.reuters.com time to read: +2 min

A view shows the logo of the European Central Bank (ECB) outside its headquarters in Frankfurt, Germany March 16, 2023. REUTERS/Heiko Becker/File Photo Acquire Licensing RightsFRANKFURT, Oct 25 (Reuters) - Bank lending across the euro zone came to a near standstill last month, European Central Bank data showed on Wednesday, providing further evidence that the 20-nation bloc was skirting a recession. Still, detailed data suggest that underlying trends may be more nuanced as the monthly flow of fresh loans was a positive 14.0 billion euros, reversing much of the previous month's negative 19.9 billion euro reading. Lending is taking a hit after a string of interest rate hikes took the ECB's key rate to a record high 4% last month, all in the hope this would depress activity enough for inflation to return to 2%. Lending to households meanwhile rose by just 0.8% after a 1.0% increase in August with the monthly flow of loans at a positive 4.5 billion euros, ECB data showed.

Persons: Heiko Becker, Balazs Koranyi, Francesco Canepa Organizations: European Central Bank, REUTERS, Rights, Bank, PMI, Thomson Locations: Frankfurt, Germany

☆ Euro zone lenders and borrowers shun credit as rates climb - ECB
▼ + stars: | 2023-10-24 | by ( ) www.reuters.com time to read: +3 min

A view shows the logo of the European Central Bank (ECB) outside its headquarters in Frankfurt, Germany March 16, 2023. "For the fourth quarter of 2023, euro area banks expect a further, albeit more moderate, net tightening of credit standards on loans to firms, and broadly unchanged credit standards on loans to households for house purchase," the ECB said. "For consumer credit, euro area banks expect a further significant net tightening." Banks expect a further, albeit less pronounced, decline in demand for all types of loans in the fourth quarter. The poll also showed banks found it harder to secure funding in the third quarter, especially from retail customers, reflecting stronger competition for deposits.

Persons: Heiko Becker, Banks, Francesco Canepa, Kevin Liffey, Bernadette Baum Organizations: European Central Bank, REUTERS, Bank Lending, ECB, Thomson Locations: Frankfurt, Germany, FRANKFURT

☆ Analysis: Middle East throws central banks yet more unknowns
▼ + stars: | 2023-10-20 | by ( Mark John | ) www.reuters.com time to read: +5 min

Now, to complicate matters for a professional caste which prides itself on being data-driven, the Middle East is throwing a new set of real but unquantifiable risks into their equations. Unless the picture changes dramatically in coming days, the European Central Bank, U.S. Federal Reserve, Bank of England and Bank of Japan are already expected to keep their policy rates on hold in meetings over the next two weeks. ECB rate-setter Yannis Stournaras, the governor of the Greek central bank, argued that Europe had broadly managed to absorb the effects of rising energy costs triggered by the Ukraine war and hoped it could do the same if further shocks emerged. For now, the conflict remains largely confined to Israel and Gaza, something S&P Global Market Intelligence said in a study this week was already "muddying the waters" for central banks. As the Fed's Powell put it: "Our institutional role at the Federal Reserve is to monitor these developments for their economic implications, which remain highly uncertain".

Persons: Jerome Powell, David Westin, Brendan McDermid, Powell, Huw Pill, Yannis Stournaras, Tetsuya Hiroshima, Fed's Powell, Dan Burns, Balazs Koranyi, Francesco Canepa, Maria Martinez, Leika, Kevin Yao, David Milliken, Tomasz Janowski Organizations: Federal, Anchor, Bloomberg, Street, Economic, of New, REUTERS, Bank of England, International Monetary Fund, European Central Bank, U.S, Federal Reserve, Bank of Japan, Fed, ECB, Reuters Graphics, Reuters, Tokai, Toyota Motor Corp, P Global Market Intelligence, Thomson Locations: of New York, New York City, U.S, Israel, Ukraine, Iran, Hormuz, Europe, United States, Japan, Gaza, Washington, Frankfurt, Berlin, Tokyo, Beijing, London

☆ ECB starts preparation for digital euro in multi-year project
▼ + stars: | 2023-10-18 | by ( Francesco Canepa | ) www.reuters.com time to read: +4 min

A number of Caribbean countries and Nigeria have already launched digital currencies while China and Sweden are among those that have rolled out pilot projects. The ECB says a digital euro will create competition in the market for payments, dominated by U.S. credit card companies. The digital euro will distributed by the ECB as well as commercial banks and digital wallet providers. Many of these projects surged around 2019, when Facebook announced plans to introduce a digital currency, which were then ditched. But the rise of stablecoins – crypto tokens backed to some degree by traditional currencies – gave central bank’s digital currencies, or CBDC in financial jargon, new impetus.

Persons: Markus Ferber, Francesco Canepa, Alex Richardson, Deborah Kyvrikosaios Organizations: European Central Bank, ECB, Bank of England, Bank of Canada, European People's Party, U.S, Monetary Fund, Commission, Bank for International, Facebook, Thomson Locations: FRANKFURT, Nigeria, China, Sweden

Member of the ECB governing council and Governor of the Bank of Greece, Yannis Stournaras talks during an interview with Reuters in Athens, Greece, October 11, 2023. In the interview, Greece's central bank governor also warned about the risk of stagflation from a prolonged war in the Middle East and spoke against increasing the amount of reserves that banks must hold. He countered calls by some of his colleagues for an early end to the ECB's last surviving bond-buying scheme, saying the central bank may need that firepower in a geopolitical environment fraught with risks. The ECB all but stopped buying bonds last year after a sudden surge in inflation forced it to unwind a decade of stimulus policies. "For the moment I see no reason why we should tighten monetary policy now because increasing the minimum requirements will imply monetary policy tightening," Stournaras said.

Persons: Yannis Stournaras, Louisa Gouliamaki, Rome, ECB policymaker Yannis Stournaras, Stournaras, Francesco Canepa, Mark Potter Organizations: Bank of Greece, Reuters, REUTERS, European Central Bank, ECB policymaker, ECB, Investors, European Commission, Thomson Locations: Athens, Greece, ATHENS, Israel, Palestine, Italy, Rome

☆ ECB's Stournaras interview with Reuters
▼ + stars: | 2023-10-12 | by ( ) www.reuters.com time to read: +9 min

Member of the ECB governing council and Governor of the Bank of Greece, Yannis Stournaras talks during an interview with Reuters in Athens, Greece, October 11, 2023. The rise in bond yields means that financial conditions are even tighter Than before given monetary policy decisions. A: I think we should act only based on monetary policy reasons and justifications. And for the moment I see no reason why we should tighten monetary policy now because increasing the minimum requirements will imply monetary policy tightening. So, we have a pipeline of monetary policy tightening which has been decided in the past.

Persons: Yannis Stournaras, Louisa Gouliamaki, European Central Bank policymaker Yannis Stournaras, it's, I'm, reinvestments, Francesco Canepa Organizations: Bank of Greece, Reuters, REUTERS, Rights, European Central Bank policymaker, ECB, European Commission, Governing, Thomson Locations: Athens, Greece, Palestine, Russia, Ukraine, Iran, China, Europe, Israel, Italy

☆ Split ECB chose rate hike to show grit against inflation - accounts
▼ + stars: | 2023-10-12 | by ( ) www.reuters.com time to read: +2 min

FRANKFURT, Oct 12 (Reuters) - Divided European Central Bank policymakers opted for raising interest rates at their latest meeting to show resolve in the fight against inflation even though evidence was inconclusive, the account of the gathering showed on Thursday. The ECB raised its key interest rate to a record high of 4.0% at the Sept 13-14 meeting but signalled that its 10th hike in a 14-month-long effort to bring down inflation was likely to be the last as the economy slowed. The ECB's account of the meeting showed the decision was a "close call" given "considerable uncertainty", with some indicators suggesting a 3.75% deposit rate might have also done the job. But in the end the proposal to raise interest rates by 25 basis point was supported by "a solid majority" of the 26 members of the Governing Council. Borrowing costs have eased slightly this week on the back of Federal Reserve officials talking down the need for further interest rate increases and nervousness about the Israel-Hamas conflict spreading more widely in the Middle East.

Persons: Francesco Canepa, Balazs Koranyi Organizations: Central Bank, ECB, Governing, Federal Reserve, Thomson Locations: FRANKFURT, Italy, Israel

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