ECB board member signals continued support for southern European lenders

EPA/FRANK RUMPENHORST

he president of the European Central Bank (ECB), Mario Draghi arrives for the openinig ceremony of the ECB's new headquarter in Frankfurt, Germany.

ECB board member signals continued support for southern European lenders


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European Central Bank board member Benoit Coeure recently attempted to reassure that European banks will continue to have a lender of last resort.

The European Central Bank is debating an extension of its bond-buying programme, particularly for southern European lenders, as its long-term refinancing program is coming to an end. The prospect of fresh ECB stimulus boosted shares for European lenders, particularly those from Italy, saw 4% gains.

Coeure said that a new bond-buying programme serves the ECB’s policy objective of a 2% inflation rate target. a statement that was in line with ECB President Mario Draghi‘s similar non-committal assertion from January.

In an interview with Spanish daily El Pais, the Governor of the Bank of France, Francois Villeroy de Galhau, confirmed that an interest rate hike this summer is unlikely. “The key question will be if the slowdown is temporary — with a bounce-back during this year — or if it is more durable,” said de Galhau.

Both Coeure and De Galhau are considered possible successors for Draghi as his second term in office will come to an end later this autumn.

The ECB will meet on March 7 where they are expected to slash growth and inflation projections. The data suggests that the Eurozone’s export-fueled economy is particularly vulnerable to a slowdown in international trade and is experiencing its biggest slowdown in a decade.

De Galhau suggested in recent weeks that the Eurozone has thus far avoided a recession due to continued, though weakening, consumer demand in Germany, France, and Spain.

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