European Central Bank Governing Council member Ardo Hansson said governments’ efforts to contain the debt crisis are encouraging and should sustain an improvement in investor sentiment.
“These changes rest on fundamentals,” Hansson, who heads Estonia’s central bank, said in an interview in Tallinn today. “There’s better fiscal policy in the euro area, there is progress on structural reforms, pan-European institutions are being built up and the ECB is playing its role. It’s all based on something and that gives me more confidence.”
At the same time, “I wouldn’t be so confident to say we’re out of the woods completely and we’re now on a permanently different path,” he said.
Financial markets have rallied since ECB President Mario Draghi pledged to do whatever it takes to safeguard the euro and announced unlimited bond purchases. European leaders are also working on a blueprint for the future of monetary union that includes centralized banking supervision. Still, Spain is resisting making a request for a fully-fledged bailout that would trigger ECB purchases of its bonds.
“There are a lot of players in this game,” Hansson said. At the ECB, “we just focus on monetary policy transmission” and price stability.
If the new bond-purchase program is implemented “the way it is proposed, including all the modalities and the conditionality, I think it is up to others to make their decisions in that changed framework,” he said.
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