MNI POLICY: ECB Has Not Yet Gone 'Fully Monty' - Panetta

By Luke Heighton

     FRANKFURT (MNI) - The ECB can still do more to fight the economic effects

of the Covid-19 crisis, Executive Board member Fabio Panetta said Tuesday,

saying it could add junk bonds to its quantitative easing operations "if

necessary."

     Speaking shortly after the ECB increased its Pandemic Emergency Purchasing

Programme by EUR600 billion, Panetta said the ECB had "learned the lessons of

the sovereign debt crisis and acted rapidly and forcefully."

     But he indicated there was more to come, arguing that it would have been

"unwise to go for the "full monty" -using our firepower to a larger extent -

without a clearer picture," given the ongoing uncertainty around the public

health and economic situation in Europe.

     Writing off sovereign debt is, however, out of the question, he said, since

doing so would amount to monetary financing, which is prohibited by law and

could undermine trust in the currency.

     "We are ready to take all the necessary measures to reach our inflation

objective and we are still guided by this aim," he added. "Fallen angels? We

haven't discussed it in the Governing Council but we will consider that if

necessary."

     It is "extremely urgent" that the European Commission agree the details of

its proposed pandemic rescue package, Panetta said, and that it should be

deployed "as soon as possible, no later than early 2021."

     The ECB should also do more in the direction of becoming an international

lender of last resort comparable to the Federal Reserve, he told Le Monde.

--MNI Frankfurt Bureau; +49-69-720-146; email: luke.heighton@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: M$X$$$,M$$EC$]