MNI INSIGHT: Five Dissenters From ECB Stance in GC Meeting

By Christian Vits

     FRANKFURT (MNI) - Five Governing Council members dissented from the

European Central Bank's potentially open-ended quantitative easing extension

announced last Thursday and spearheaded by ECB President Mario Draghi, MNI

understands.

     The Governing Council members opposed to the idea not to set a firm end

date for QE were Austria's Ewald Nowotny, Estonia's Ardo Hansson, German

Executive Board member Sabine Lautenschlaeger, the Netherlands' Klaas Knot and

Bundesbank President Jens Weidmann.

     Draghi is understood to have blocked a compromise between those five and

the rest of the Governing Council and there was no vote on the issue. 

     Executive Board member Benoit Coeure was said to have shown sympathy for

the position of the dissenters. In an interview with a French newspaper

published Oct. 29, Coeure said he hopes "that this will be the last extension."

     The ECB last week decided to extend its bond-buying program for nine months

to September next year with monthly volumes halved to Euro 30 billion, starting

in January. 

     In the ensuing press conference, Draghi stressed that there is still "a

large amount of uncertainty" and added that the decision "is for an open-ended

program and it is not going to stop suddenly."

     The "large majority" of the Governing Council expressed its preference to

keep it open-ended, Draghi said in the press conference, but acknowledged that

"a few" members argued in favour of an end date for the balance sheet expansion.

     Weidmann said on Friday, "from my point of view, a clear endpoint for net

asset purchases would have been required, especially as I am very critical of

government bond buys in a currency union. Such buys blur the borderline between

monetary and fiscal policy."

--MNI Frankfurt Bureau; +49 69 97782671; email: christian.vits@marketnews.com

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