March 4, 2019 / 2:08 PM / in 21 days

Bank of Italy says ECB's bank funding can't be used to buy govt bonds

MILAN, March 4 (Reuters) - Liquidity provided to banks by the European Central Bank must be used to finance businesses and not to buy government bonds, Italy’s central bank governor Ignazio Visco said on Monday.

Speaking at the Spencer Stuart Board forum, Visco said both the Italian government and the country’s banks had benefited from having used longer-term ECB funds to buy state bonds in the wake of the global financial crisis, but that was no longer the case.

“The country must defend its credibility in Europe ... that means ECB’s money cannot be used to buy government bonds,” he said, adding he could not go into discussions over a new round of targeted longer-term ECB funds.

Reporting by Valentina Za; editing by Agnieszka Flak

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