Coeure says ECB's QE Program Kicks Off Without A Hitch

Mar 12 2015 | 6:02am ET

(Reuters) - The European Central Bank's quantitative easing program has kicked off without a hitch, ECB executive board member Benoit Coeure said on Thursday, adding that the central bank had no problems in finding bonds to buy.

The ECB has bought 9.8 billion euros worth of assets in three days, Coeure said, with an average maturity of nine years, putting it well on track to reaching a total of 60 billion euros in bonds in March, as intended by the ECB. The program began on Monday.

"QE is working, there is no doubt it will work," Coeure said in a speech in Paris.

Following the example of the Japanese and U.S. central banks, the ECB embarked on a program of quantitative easing with a view to raising euro zone inflation from below zero back towards its goal of just under 2 percent, and to helping buoy economies across the 19-country bloc.

But with some domestic investors reluctant to sell bonds, analysts have questioned whether the ECB can reach its target of buying a trillion euros of mainly sovereign bonds over the next 18 months.

Coeure sought to allay those concerns, saying that there were plenty of bonds available to be bought and that one had to trust markets for that. The ECB is buying bonds in a way that respected the functioning of markets, he said, adding: "We don't want to kill the market."

The ECB wants to be predictable and regular with its quantitative easing policy, he said.

"Considering the uncertainties regarding U.S. monetary policy and the repercussions on emerging countries, it is very important to create a bubble around euro zone countries," he said, referring to the QE program and other steps including the central bank providing forward guidance on its policy.

Coeure said he hoped Greek bonds could be eligible for QE-related bond buying as soon as possible, but he said the country must first conclude its bailout review.

The ECB will likely be able to buy Cypriot bonds as part of its QE plan more quickly as Cyprus was close to a successful conclusion of its bailout review, he said.

Just days after euro zone finance ministers agreed to give France yet another reprieve on its fiscal targets, Coeure insisted that rules must be respected and warned against treating large euro zone countries differently from small ones.

He said Europe needed to reform and should not only rely on a cyclical recovery based on low oil prices. The lower euro, Coeure said, is a logical consequence of diverging EU and US monetary policies.


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