The European
Central Bank should launch a U. S.-style asset purchase programme if economic conditions change,
executive board member Lorenzo Bini Smaghi said, opening
the door to a possible policy shift at the bank to combat deflation. Bini Smaghi, who steps down from the ECB next week, told the
Financial Times on Friday that, if required, "I would see no reason why such an instrument tailor-made for specific characteristics of the euro area should not be used." Quantitative easing would be appropriate "if ... in particular in countries facing a liquidity trap that may lead to deflation," he told the newspaper. With no end in sight to the euro zone debt crisis, pressure is growing on the ECB to deploy similar crisis-fighting tools as its peers in Britain or the
United States, but the bank - supported by Germany - has steadfastly resisted. The
Federal Reserve bought more than $2 trillion of Treasuries and other securities with new money to kick-start the U. S. economy in 2008-2010, while the
Bank of England relaunched its quantitative easing programme in October. So far, the ECB has always referred to the fact that its mandate to preserve price stability differs from the Fed's and the BoE's.
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