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By Luke Heighton
     FRANKFURT (MNI) - Fears that the end of the net asset purchase program will
prompt a rise in cross-border capital flows and increased market volatility are
largely unfounded, ECB Executive Board member Benoit Coeure said today.
     Here are key points from his speech on exiting unconventional monetary
policies given in Paris:
     --While concerns have been voiced that cross-border capital flows may
become a source of market volatility, with uncertain effects on global asset
prices, after the end of APP, Coeure said the stock effect of central bank asset
purchase programmes, together with clearer guidance, has helped mitigate abrupt
changes in international asset allocation in recent years.
     -- The ECB's advanced forward guidance on interest rates adopted in June,
together with reinvestments from maturing securities, has reduced the likelihood
of sudden and adverse spillover effects in the future. "Further changes in our
forward guidance, if warranted in the future, may help us remain in control of
financing conditions along the policy normalization path," Coeure said.
     --As a result, policymakers have been able to pursue their domestic
objectives without sending shock waves across global financial markets.
     -- Markets are not immune to foreign spillovers but central banks are
required to calibrate their policies according to domestic mandates.
     -- In the euro area, significant monetary policy stimulus is still needed
to support the further build-up of domestic price pressures and headline
inflation developments over the medium term.
--MNI Frankfurt Bureau; +49-69-720-146; email:
--MNI London Bureau; +44208-865-3829; email:
[TOPICS: M$E$$$,M$X$$$,M$$EC$]