>   (email exchange)
>   On Wed, Aug 22, 2012 at 3:02 AM, wrote:
>   You are totally right about him, I sent you a word doc with his exact words
>   (emphasis mine)

Repeat: Asmussen: ECB Wants To Eliminate Doubts About Euro
2012-08-20 05:36:05.371 GMT

–First Ran On Mainwire At 2257 GMT/1857 ET Sunday

FRANKFURT (MNI) – The European Central Bank wants to remove any doubt about the permanence of the common currency, ECB Executive Board member Joerg Asmussen said in a newspaper interview published in Monday’s edition of the German daily Frankfurter Rundschau.

The German board member told the paper that financial market certainty regarding the continued existence of the euro was a necessary condition for the currency’s stability.

The ECB’s planned new bond-buying program is superior to its predecessor, the Securities Market Program, and the Governing Council will work on details at its next meeting, Asmussen said.

Noting the high risk premia for some sovereign bonds in the euro area, which he said were in part due to concerns about the reversibility of the euro, Asmussen said that such an exchange rate risk was theoretically not admissible in a currency union and was leading to the incomplete transmission of ECB monetary policy to some euro area economies.

“Our measures attempt to repair this defect in the monetary policy transmission mechanism,” he said. The worries about the euro’s permanence are no wonder, he added, given “how carelessly” the currency is talked about in Europe.

“It is precisely these concerns about the continued existence of the euro that we want to rid market participants of,” he said.

Asmussen asserted that the ECB is acting within its mandate, adding that “a currency can only be stable if there is no doubt about its existence.”

The new bond-buying program meant to address this issue “will be better conceived” than the SMP, he said, repeating that the ECB will only act in tandem with the EFSF or ESM and that interested countries must submit a request and satisfy “comprehensive economic policy conditions.”

The ECB’s Governing Council “will decide in complete independence whether, when and how bonds are purchased on the secondary market,” he added.

What happened last summer with Italy, which failed to use the time bought by ECB bond purchases to make necessary adjustments, cannot be allowed to happen again, he said.

Moreover, in the new program the ECB will deal with the problem of senior status, which interferes with affected countries’ return to capital markets because private investors fear being disadvantaged vis-a-vis the ECB, he said.

Asked if the new program could be successful because it will be unlimited in time and scope, Asmussen confirmed that ECB President Mario Draghi had said as much.

“But wait and see,” he said. “We are working on the design of the new program and will occupy ourselves with these questions in our next meeting.”

Credit and money growth in the euro area are “moderate,” and “inflation expectations in the entire Eurozone are firmly anchored to our target,” he said. “We are monitoring price developments very closely and have all the necessary instruments to fight possible inflationary dangers effectively and in a timely manner.”

19 Responses

  1. Print more Euros…

    Pyramid Scheme is collapsing…

    Print more Euros….

    Each pyramid level requires more euros than the last…

    Print more Euros….

    Must no reward productive work….

    Only reward bankers on top of the pyramid…

    Print more Euros….

  2. “…interested countries must submit a request and satisfy “comprehensive economic policy conditions”.

    From now on, it seems, the ECB will rule.

    The peoples and their nations can just forget about politics, take the back stage and duck for cover if they can.

    Still the question remains: why should an unelected body such as the ECB have the power to dictate “economic policy conditions” to the peoples of Europe and their elected representatives?

    The U. S. is at least preserving a democratic facade over the power of bankers; the EU seems ready to go one step further and scrap it altogether in order to save the euro from collapse.

    1. @Jose Guilherme,

      “The U. S. is at least preserving a democratic facade over the power of bankers”

      Jose, Here is Milton Friedman telling a young michael moore about the economic decisions of the Ford Pinto and how a 13 dollar part was not installed in the gas tank that would have saved many human lives.

      The debate is interesting, especially since the young idealist agrees with Friedman that a price can be put on human life that corporations can factor into thier budgets. (Friedman explains it as starving 1 million africans to ensure the resources to put in that part that saved 200 US lives)

      But the part that should interest you is about 5 minutes into the video, Friedman says the government must provide a court of law, where corporations can be sued and severely punished for FRAUD. However, from bill black, to brookesly borne, and countless others down to YOU, the fraud is going unpunished, Friedman is rolling in his grave, saying we are FREAKING DOOMED! LOL! 🙂

      1. @Save America,

        On the day that the President will have to submit a request to the Fed and prove that he has satisfied “comprehensive economic policy conditions” (as dictated by the Fed) then the U.S. will have finally attained the level of civilization of Old Europe. 🙂

    1. @Mario,

      Our orthodox politicians, male & female alike, have an internal psychotic defense mechanism again anything they don’t understand.

      “If it’s legitimate economic rape, then it has to be borne.”
      Keatingnomics 101

      No matter how many victims shout “Bullshit!” there’s always someone yellen “We have to do it. A contract is a contract.”

      After all, no one could have predicted that Greenspan & Madoff would compete to say anything for anyone … for a big enough price – their country be damned. Their excuse is that they had to do it to be “allowed” to be successful, and are shocked that the people bribing them let them do it. Sounds like economics on steroids.

      We need a new electorate. One able to wake up faster. My own neighbors still feel that Obama is a nice man, misunderstood, and just “needs more time.” That’s what people said about Hoover too. In fact, it’s a standard saying in oncology too:

      “Any chemotherapy will eventually work, IF you can keep the patient alive long enough.”

  3. Warren, I have two related questions:

    1. When the Treasury receives payments or makes payments, does it ‘settle’ with banks in the same way that banks settle amongst themselves, or does it take/make payments wholly in reserves?

    i.e. Say bank A and its customers owe the Treasury $2 million in total (tax and bond purchases) and the Treasury owes the customers of bank A $1 million (wages, fees, interest, welfare etc), will bank A simply transfer $1 million in reserves to the Treasury (in settlement), or will bank A transfer $2 million in reserves to the Treasury, followed by the Treasury then transfering $1 million in reserves back to bank A (when it spends)?

    2. Do all payments to/from the Treasury go into and come out of its account at the Fed, or do some just move between private accounts and T&L accounts? i.e. when tax is paid, commercial banks debit customer accounts and credit treasury T&L accounts. Does the Treasury then spend from those T&L accounts, or does the money first get transferred to the Treasury’s Fed account before the Treasury spends?

    I tried looking for the info but couldn’t find it… Thanks!

    1. the treasury makes payments by instructing the fed to debit the tsy’s account and credit the fed account of the appropriate member bank.

      the treasury receives payments via tax and loan accounts at member banks, resulting in the fed debiting the member bank’s fed account and crediting the tsy’s account at the fed.

      1. just to clarify:

        All money owed to Treasury goes into the Treasury’s account at the Fed, and all money spent by the Treasury comes out of its account at the Fed?

        T&L accounts are basically ‘holding pens’ for money owed to the Treasury before it is transferred to the Treasury’s account at the Fed.


      2. When banks settle, they just transfer the difference in reserves, right? So if bank A owes bank B $100 and B owes A $90, bank A will simply transfer $10 in reserves to B.

        But this doesn’t happen between the Treasury and banks, correct?

        All money owed to the Treasury is (eventually) paid IN FULL in base money?

        Banks and the Treasury do not just “settle the difference”. Is this right?

        Thanks again..

      3. actually in general banks use a private clearing corp with only the net of all that clearing at the fed each day.

        they all have debits and credits flying around all over the place all day long with the ‘nets’ settling after the close.

      4. do you know where I could find a detailed explanation of how that inter-bank payment and settlement process actually works in practice (all the “nitty gritty” details)?

Leave a Reply to Mario Cancel reply

Your email address will not be published. Required fields are marked *