ECB's Constancio plays down risk of moral hazard from QE

FRANKFURT, April 4 Fri Apr 4, 2014 11:33am EDT

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FRANKFURT, April 4 (Reuters) - Economic recovery in countries on the euro zone periphery has would make it easier for the European Central Bank to buy their bonds as part of a general asset=purchase programme, ECB Vice-President Vitor Constancio said on Friday.

Asked in an interview with CNBC whether concerns about moral hazard might make it hard for the ECB to buy bonds from the countries worst afflicted by the financial crisis, Constancio said this was less of an issue than in the past.

"The fundamentals in Europe have improved, including in distressed countries ... so the need for big pressure now is less than it was," he said.

"If we are talking about generalised asset purchases, it will have to be about asset purchases in all countries, not just countries who need that. So it's a pure monetary policy thing, not an instrument to put pressure on particular countries."

ECB President Mario Draghi said policymakers reached unanimity on Thursday for the first time that asset purchases funded by newly created money might be needed to tackle persistently low inflation in the euro zone.

Earlier Constancio said there had been no discussion of details of how the asset purchases might be conducted. (Reporting by David Milliken; Editing by Larry King)

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