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Euro strength here to stay, unless ECB steps in

By Anirban Nag and Eva Taylor LONDON/FRANKFURT (Reuters) - Many of the factors driving the euro exchange rate to levels that have set off alarm bells at the European Central Bank are unlikely to go away on their own, part of the reason the bank has been threatening action. The euro is still off the peaks of 2011, but because inflation is now heading close to zero, the ECB is sensitive to its current rate because anything that makes it stronger pushes deflation nearer.

Europe's banks prepare for ECB tests with new provisions

By Laura Noonan LONDON (Reuters) - The tens of billions of euros euro zone banks set aside for loan losses in their latest annual accounts may have substantially reduced the chance of institutions failing ECB stress tests in the next few months. A total of 71.5 billion euros ($99.3 billion) was set aside in 2013 by the 20 biggest listed banks involved in the exercise, a Reuters analysis of their new annual reports shows. Many also boosted capital ratios by raising cash and hoarding profits.

Fed's Stein: Financial stability should inform policy

WASHINGTON (Reuters) - A top Federal Reserve policymaker on Sunday repeated his controversial assertion that financial stability should be an aim of U.S. central bank policymaking. Jeremy Stein, a Fed governor who is resigning next month, told an International Monetary Fund forum there is a need "in principle" to incorporate the aim of financial stability into monetary policies. Less clear, he said, is how to "operationally" incorporate it into policy.

ECB ready to use asset purchases if needed: Coeure

WASHINGTON (Reuters) - The European Central Bank is ready to make asset purchases if it deems them necessary to counter a too prolonged period of low inflation in the euro zone, ECB Executive Board member Benoit Coeure said on Sunday. In a speech in Washington, Coeure added that the ECB would have to decide whether such asset purchases, or a form of quantitative easing, would be useful and comply with its mandate. Quantitative easing occurs when central banks print money to buy assets.

ECB's Draghi: the strong euro could require policy action

European Central Bank chief Mario Draghi said Saturday that the bank may need to take action to stem the rising euro. "The strengthening of the exchange rate would require monetary stimulus" as long as interest rates are already extremely low, he said. Draghi also said that the ECB "should not be complacent" about extremely low inflation, which many fear could stall Europe's economic rebound.

ECB would need to go beyond ABS market for potential QE: Draghi

By Jan Strupczewski and Krista Hughes WASHINGTON (Reuters) - The European Central Bank could not rely solely on purchases of asset-backed securities (ABS) if it resorts to unconventional steps to boost inflation, given the limited supply of the securities, ECB President Mario Draghi said on Saturday. If the ECB starts injecting money into the economy using asset purchases, it is expected to choose a mix of government and private assets, including ABS, which collapsed during the financial crisis and are still recovering.

Around one-in-three chance ECB to buy bonds outright: Reuters poll

By Jonathan Cable LONDON (Reuters) - There is slightly less than a one-in-three chance the European Central Bank will start buying bonds outright as it struggles to lift dangerously low inflation and support a lackluster economic recovery, a Reuters poll found. The poll of 59 economists, taken this week, gave a median 30 percent chance the ECB would start a quantitative easing program, about half a decade after the U.S. Federal Reserve and the Bank of England launched the same kind of stimulus.

IMF: ECB action on deflation 'a question of timing'

European Central Bank action to ward off deflation is just a timing question, International Monetary Fund chief Christine Lagarde said Thursday. Questioned about the ECB's decision last week to not take any action despite IMF warnings over very low inflation in the eurozone, Lagarde stressed that "we respect the judgment of the central bank." She said the ECB had assured that it was prepared to adopt "unconventional" monetary measures to stimulate the economy if necessary.

Greece's return to bond market seen boosting periphery debt

By John Geddie LONDON (Reuters) - Greece's imminent return to bond markets just two years after restructuring its debt lifted investor appetite for riskier credits on Wednesday and was seen pushing peripheral yields back towards multi-year lows. Yields on sovereign bonds from the euro zone's periphery dipped but remain slightly higher on the week after European Central Bank policymakers warned that any move to print money to raise ultra-low inflation was still a long-way off.

U.S. recovery puts onus on Europe and China

By Mike Peacock LONDON (Reuters) - The world's top financial policymakers descend on Washington later this week with a debate fizzing once again about what needs to be done to galvanize economic growth. The International Monetary Fund has already called on Europe to do more ahead of the IMF April 11-13 Spring gathering, alongside which G20 finance ministers and central bankers will meet.
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