The ECB has already begun buying covered bonds and bundled loans known as asset-backed securities (ABS) with a view to increasing the size of its balance sheet to levels seen in early 2012 – around 1 trillion euros higher than its level today.
“We have, of course, to closely monitor if the pace of its evolution is in line with that expectation,” Constancio said. “In particular, during the first quarter of next year we will be able to gauge better if that is the case.”
“If not, we will have to consider buying other assets, including sovereign bonds in the secondary market, the bulkier and more liquid market of securities available,” he added in the text of a speech for delivery in London.
Constancio’s comments are the clearest indication yet from an ECB policymaker on the timing of any decision on whether to print money to buy sovereign bonds – a policy known as quantitative easing that financial markets see as the central bank’s best shot of stimulating the flagging economy.
“It would be a pure monetary policy decision, buying accordingly to our capital key, within our mandate and our legal competence,” he said.
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