(Reuters) – The European Central Bank’s unprecedented decision to use outside help for new asset purchases is stirring conflict among policymakers, highlighting the difficulty for the ECB of considering even more extreme policy action.
ECB President Mario Draghi outlined last week new programs under which the euro zone’s central bank will buy asset-backed securities, which repackage bank loans, and covered bonds, secured on solid assets such as property, starting within weeks.
Concerned that individual central banks lack the required expertise, the ECB plans to employ an external bank or professional asset manager to buy the securities on its behalf, at least initially.
But within the ECB’s Governing Council there are clashing views over how far it should go to revive lending in the euro zone and how these debt purchases should be carried out.
Such friction over a key tool at a time of stagnating growth and worryingly weak price pressures in the euro zone risks weakening the ECB’s resolve in the fight against deflation and poses questions as to how easily it could take further steps.
These might include purchases of government bonds under a U.S.-style quantitative easing program.
German Bundesbank President Jens Weidmann has not been shy about airing his discontent over the ABS purchase plan, saying the ECB should not take risks from banks and pass them on to taxpayers. German politicians have also raised objections.
Others, such as Banque de France governor Christian Noyer, disagree with the way the ECB wants to go about the purchases, two sources familiar with the discussion told Reuters.
Noyer, who backs the ECB’s ABS plan in principle, sees the big national central banks as perfectly capable of assessing the assets in question and intervening in the market.
“Noyer does not want to leave this to the private sector,” one of the sources told Reuters.
The French central bank declined to comment on the matter.