March 21, 2020 / 7:46 PM / 9 days ago

ECB has tools left but now governments must fight crisis: Schnabel

FILE PHOTO: Isabel Schnabel, member of the German advisory board of economic experts attends the 29th Frankfurt European Banking Congress (EBC) at the Old Opera house in Frankfurt, Germany November 22, 2019. REUTERS/Ralph Orlowski

FRANKFURT (Reuters) - The European Central Bank (ECB) has all of its tools still available to mitigate the coronavirus crisis but it is time for politicians, particularly at a European level, to take action, ECB board member Isabel Schnabel told a German newspaper.

With Europe’s economy imploding, the ECB has agreed to a range of stimulus measures including ultra-cheap loans to banks and asset buys worth 1.1 trillion euros ($1.2 trillion) this year, all in the hope of keeping borrowing costs for firms and governments at rock bottom level.

“The ECB is in the comfortable position of having a large set of tools, none of which has been used to its full extent,” Schnabel told Frankfurter Allgemeine Sonntagszeitung.

“We have the key interest rates, we have instruments for providing liquidity to the banks, and we have the asset purchase programs,” Schnabel said. “The claim that central banks have run out of tools simply doesn’t match up to the facts.”

But she said the ECB alone was not enough and the European Union also needed to act to compliment national measures.

“There are proposals to use the European Stability Mechanism or the European Investment Bank. The issuance of one-off ‘corona bonds’ would also be conceivable. It is up to politicians to decide,” Schnabel said.

For the full text of Schnabel's interview, please click: here~e8725acf2f.en.html.

Reporting by Balazs Koranyi; Editing by David Holmes

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