ECB’s Holzmann: Haven’t Even Begun to Think about Buying Equities

26 June, 2020



By David Barwick – FRANKFURT (EconoStream) – The European Central Bank has not yet so much as begun considering expanding its asset purchases to encompass equities, Governing Council member Robert Holzmann said on Friday.

In an interview with CNBC, Holzmann, who is Governor of the Austrian National Bank, said that without proper management of the pandemic, ‘the recovery will be incomplete and fragile.’

‘And in this context, we consider all measures possible, but for the moment, we haven’t even started thinking about purchasing shares’, he added.

Explaining the Governing Council’s June 4 decision to boost the volume of the pandemic emergency purchase programme (PEPP) by €600 billion to a total of €1.35 trillion, Holzmann noted that members had been ‘in unanimity … that more action is needed’.

The decision ‘ was taken in clear perspective that the crisis requires a quick and flexible intervention on the European markets for reasons of liquidity, but also financial market stability and for better transmission of monetary policies to all countries of the European area’, he said.

The ECB’s strategy review would take into account the moral hazard aspect of its policies, Holzmann said.

The ECB in early April deferred the conclusion of its strategy review from the end of 2020 to mid-2021. The launch of the review had been announced on January 23, at which time the ECB indicated that the scope of the review would focus on “quantitative formulation of price stability, monetary policy toolkit, economic and monetary analyses and communication practices,” while financial stability, employment and environmental sustainability would also be part of it.

In other comments, Holzmann praised banks’ handling of the crisis, calling them ‘a source of the solution’ rather than part of the problem.