ECB's Hansson signals skepticism on QE as Greece clouds stimulus

By Stefan Riecher

The European Central Bank should slow its rush toward fresh stimulus as current measures haven?t had time to work and challenges including Greece?s political crisis make buying government bonds difficult, Governing Council member Ardo Hansson said.

?You shouldn?t become overactive every few months when you don?t see the full effects? of measures, Hansson said in an interview in Frankfurt on Thursday. ?I?d personally find announcing a bond-buying program including Greek government bonds in January problematic.?

Hansson?s skepticism on quantitative easing ahead of the ECB?s Jan. 22 policy meeting lines him up with officials including Germany?s Jens Weidmann who say QE could incur unwarranted risks. While President Mario Draghi says the threat of a deflationary spiral warrants action, the decision is complicated by Greek elections three days later that may empower a party which wants to restructure the nation?s debt.

ECB staff presented governors with various QE models on Jan. 7 in Frankfurt, according to a euro-area central-bank official who attended the meeting. The suggestions included buying as much as 500 billion euros ($590 billion) of investment-grade assets.

Hansson said he?d like any purchases to center on corporate bonds rather than government debt, as the ECB shouldn?t ?be encouraging governments to further expand deficits.?

Monetary financing

The Estonian central-bank head is excluded from formal votes by the Governing Council this month under revised ECB procedures, though he can still speak in discussions. The Chicago-born 56-year-old holds a PhD in economics from Harvard University and served with the World Bank in eastern Europe for a decade, becoming the institution?s chief of economic...

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