FRANKFURT, April 3 (Reuters) - The European Central Bank discussed a series of unconventional policy measures, including quantitative easing, at its meeting on Thursday, ECB President Mario Draghi said.
“In the course of this discussion we talked about lower interest rates, we talked about (a) lower deposit facility rate, we talked about prolonging the fixed-rate full allotment, we talked about QE,” he told a news conference after the bank decided not to take any action.
Alone among the world’s four largest central banks, the ECB has so far avoided quantitative easing. It had argued that QE would be hard to implement in an 18-member currency bloc and that there were other, more targeted, ways to reduce high borrowing costs in parts of Europe.
However, the door to asset purchases was opened last month when one of QE’s fiercest critics, Bundesbank President Jens Weidmann, said the ECB could consider buying euro zone government bonds or top-rated private-sector assets.
Draghi said an asset-buying programme would need to be designed to fit Europe’s institutional and financial set-up, which differed from that of the United States.
“In the United States, the effect of QE is immediate on all the asset prices, and the effect of the term premium is also quite direct, because it’s an economy based on capital markets,” he said.
“In our case it’s an economy based on the bank lending channel and ... the programme has to be carefully designed in order to take this element into account.”
Reporting by David Milliken Editing by Jeremy Gaunt