European Central Bank Executive Board member Benoit Coeure said policy makers’ pledge to buy the bonds of distressed euro-area nations is helping to foster confidence in the irreversibility of the single currency.
“Preserving price stability over the medium term is the best contribution that monetary policy can make to economic stability,” Coeure said in a speech in Brussels today. “Our recent decision to undertake Outright Monetary Transactions can also be seen in this context, to the extent that it helps to restore confidence in the integrity and irreversibility of the single currency.”
Coeure said the ECB’s non-standard measures, which also include record liquidity provision to the region’s banks, have prevented “more adverse economic outcomes” by focusing policy on those countries most affected by the crisis, and ensuring small- and medium-sized companies can obtain funding.
“The monetary policy measures taken by the ECB have helped to avoid a collapse in money and credit and to eliminate the specter of the Great Depression,” Coeure said. “They have not only avoided a collapse of the financial system, but also, and more importantly, prevented a surge in unemployment and poverty in the euro area.”
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