REPEAT: MNI: Negative EU Events Won't Impact ECB MonPol Goals

Repeats Story Initially Transmitted at 07:15 GMT Apr 12/03:15 EST Apr 12

--EU Political Uncertainties, Brexit Not Barriers To ECB QE End

By Les Commons

     LONDON (MNI) - Negatively-perceived European events, such as Spanish and

Italian political turmoil, will not set back or delay the European Central

Bank's monetary policy goals and transmission efforts, a Eurosystem source told

MNI in exclusive comments.

     "It's always the same refrain. When potentially risky events happen, the

solidity of the Eurosystem is questioned and fears spread," said the source.

     According to the source, not even Italy's prolonged political stalemate

triggered by the uncertain March 4 election outcome will negatively impact on

monetary policy goals and on the ECB's schedule.

     "Paradoxically, analysts were more keen to consider the 2016 constitutional

referendum defeat as the key catastrophic event that would have pushed Italy

into the precipice, even more so than the recent elections. Then again, nothing

so terrible has happened since 2016," the source argued.

     --ITALY READY FOR QE-END

     On the contrary, Italy is in a better shape today to deal with the eventual

end of the ECB's asset purchase program.

     "A certain degree of political uncertainty has always tainted Italy. It is

inbred. But the country is seeing the highest growth levels in its past 10,

economic and financial fundamentals are stronger," said the source.

     "Let's take a look back in time. These past 10 years have experienced a

series of unexpected events that in theory should have had the potential to

undermine the eurozone and destroy the single currency, but this has never

happened," argued the source.

     "The Greek euro referendum following the country's sovereign debt crisis is

the perfect example of 'alarmist frenzy'," he noted, adding that ultimately

Greece didn't abandon the single currency and despite the many challenges it

still faces, is now back on track.

     --SPAIN, BREXIT NO BARRIER

     In a similar way Spain's political chaos following social and political

unrest linked to Catalonia's independence referendum have not led to the

disruption of the eurozone, nor to a delay in reaching set macroeconomic

targets, primarily getting closer to optimal inflation levels.

     "If things had really gone bad, we wouldn't be more confident today in

reaching desired inflation levels in the short-run. The fact that we are moving

towards  monetary policy normalization is a positive sign in itself".

     Brexit, too, can be pointed to, said the source. Even though the UK was

never part of the single currency, it is part of the single market and its exit

could have questioned the solidity of the European Union with negative

repercussions on financial markets.

     "Then again, the post-Brexit apocalypse did not manifest itself".

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com