Right now in Brussels, Jean-Claude Trichet is giving another defence of ECB policy options. He’s says “uncertainty remains particularly high” in Europe and will need European Central Bank support.He also disputed Christine Lagarde’s liquidity claims, according to Market News International: “Fears that there would be liquidity problem in the banking system” of systemic nature are “wrong.” Nevertheless, Trichet reiterated the central bank’s call to private
lenders to “recapitalize as effectively as possible.”
Trichet insists that ECB bond purchases do not breach treaty rules. ECB says completed €6.651bln of bond purchases under securities market programme (SMP) in week to AUG 26th vs. Prev. €14.291bln
The ECB is in a position to give support because, first of all, he says their balance sheet has grown less than the Fed’s.
Trichet says total value of ECB eligible collateral is EUR 13tln and EUR 14tln, clearly no shortage.
He says our actions are in full compliance with our independence, and bond purchases do not interfere with monetary policy — repeating his claim from Jackson Hole.