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Liikanen says no legal barrier to ECB buying corporate bonds

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(Globalpost/GlobalPost)

HELSINKI (Reuters) - The European Central Bank is considering all options to help low interest rates get through to companies and consumers and there are no legal barriers to it buying corporate bonds, Governing Council member Erkki Liikanen was quoted on Friday as saying.

The bank has largely steered clear of intervening on the corporate debt market as a way of prodding the economy back to life and has only stepped in to buy government bonds at the worst moments of the euro zone's debt crisis, in contrast to the quantitative easing employed by other major central banks.

Asked by a Finnish economic magazine if the bank could use unconventional means to boost the euro zone economy and step in to buy corporate bonds, Liikanen said: "One has always to be ready to explore new options. Our task is to work through money markets. I am not staking a stance on individual actions, but all options can be reviewed.

Pressed on whether if it would be legal for the ECB to purchase corporate bonds directly, he told economic magazine Talouselama: "Central banks can buy corporate bonds. The Bank of Finland's investment portfolio has both foreign and domestic corporate bonds."

ECB President Mario Draghi earlier this week stressed the central bank's limited room to manoeuvre to improve lending to small and medium-sized enterprises, pointing to governments and institutions like the European Investment Bank for support.

Liikanen also said he was optimistic that Slovenia, striving to avoid being the next euro zone economy to need bailed out, and Portugal would carry out necessary economic reforms.

"Slovenia's banking sector is just about the size of the country's GDP, I have no doubt they can fix the problem," Liikanen said in an interview with economic magazine Talouselama.

Although Portugal's constitutional court recently rejected austerity measures linked to its bailout from the European Union and International Monetary Fund, Liikanen said he believed the government wanted to continue with economic reforms.

(Reporting by Terhi Kinnunen; Editing by Patrick Graham)

http://www.globalpost.com/dispatch/news/thomson-reuters/130419/liikanen-says-no-legal-barrier-ecb-buying-corporate-bonds