VIENNA The European Central Bank will find instruments if it needs to provide more stimulus but with much of its arsenal already exhausted, it is facing the danger of diminishing returns, Governing Council member Klaas Knot said on Wednesday.
"If we need to find instruments, we will find instruments," Knot, who also head the Dutch central banks, told a conference. "One should never underestimate the degree of innovation that also takes place within central banks."
"The problem is of course one of decreasing returns to scale... if you provide more and more of essentially the same medicine," Knot said. "So you have decreasing efficiency and probably increasing side effects."
(Reporting by Francesco Canepa, writing by Balazs Koranyi)