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ECB Liquidity Plans Will Be Reflected in the Euro's Value -- Report

ECB Liquidity Plans Will Be Reflected in the Euro's Value -- Report

07/15/2014

PARIS--The European Central Bank's plans to generate long-term liquidity will be reflected in the value of the common currency, the central bank's chief economist Peter Praet said in an interview with French paper Les Echos.

"When the new measures will be operational, they will reinforce the accommodating monetary policy the euro zone needs, contrary to other important currency zones which are at a completely different stage in the conjuncture cycle," Mr. Praet told the newspaper. "With time, this rebalancing should be reflected in the external value of the euro."

The ECB is hoping that the long-dated loans it announced on June 5 will encourage banks to lend because the funding from the central bank is conditional on banks generating new loans. The targeted longer-term refinancing operation, or TLTRO, will also lower rates on short-term money markets and compete with other funding sources for banks, driving down rates even for banks that don't borrow from the ECB.

Separately, Mr. Praet warned on France's low rate of investment.

"Investment poses a particularly acute problem" in France, Mr. Praet told Les Echos, adding that the government should "re-establish confidence to allow investment to pick up."

 

Newspaper Web site: http://www.lesechos.fr

 

Write to Gabriele Parussini at gabriele.parussini@wsj.com

 

(END) Dow Jones Newswires

July 15, 2014 04:21 ET (08:21 GMT)

Copyright (c) 2014 Dow Jones & Company, Inc.

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