June 7, 2019 / 8:56 AM / in 12 days

ECB's Nowotny says bank subsidies should not become a permanent instrument

European Central Bank (ECB) Governing Council member and OeNB Governor Ewald Nowotny addresses a news conference in Vienna, Austria March 28, 2019. REUTERS/Leonhard Foeger

VIENNA (Reuters) - The European Central Bank’s new offer to lenders to effectively pay them for taking its money should be limited to a certain period and not become a permanent instrument, ECB policymaker Ewald Nowotny said on Friday.

The ECB on Thursday ruled out raising interest rates in the next year and offered to effectively pay banks to borrow from it and lend that money on to the real economy.

“From my point of view, this should not be one of the ECB’s permanent instruments,” Nowotny, who heads Austria’s central bank, told a news conference in Vienna.

“Therefore, it is good that TLTRO III is somewhat less generous than the previous model.”

Reporting by Kirsti Knolle; Editing by Catherine Evans

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