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Liikanen, Stubb upbeat on eurozone changes

Finland's central bank chief and Europe minister are cautiously optimistic about proposed eurozone banking reforms.

Erkki Liikanen
Liikanen was bullish in his address on Wednesday. Image: Yle

Bank of Finland governor Erkki Liikanen has defended the European Central Bank's new debt-purchase programme. The plan, announced last week, aims to make monetary policy more efficient.

Speaking in Helsinki on Wednesday, Liikanen, who is a member of the ECB's board, said the programme will make the effects of ECB rate changes felt equally throughout the eurozone.

"The aim of the decision is safeguarding monetary policy transmission and the singleness of the monetary policy without changing the division of responsibilities between member states and the ECB," Liikanen said.

He stressed that the so-called Outright Monetary Transactions programme "will be applied in equal terms to all euro area countries".

Liikanen told Yle that the programme will not have any impact on Finnish banking customers on an everyday basis.

"From the standpoint of the regular taxpayer, there may be a change in that the likelihood of major banking crises will decrease -- at least the kinds of crises where taxpayers have to foot the bill," he said, then asking rhetorically: "How will this decrease? Because banks can be monitored in a centralised way and parallel to that we'll build a system through which they can also be wound down in a controlled way." 

Stubb: Healthy banks shouldn't suffer

Later on Wednesday, European Affairs Minister Alexander Stubb welcomed proposals for the ECB to supervise the region's banks, but warned that a banking union should not increase the burden on healthy banks.

"We think the basic idea is very good," he told Reuters, referring to proposed reforms which aim to break the link between states and distressed lenders.

"At the same time we must study the details [and]...make sure that healthy banks don't take on the burden of bad banks," he added.

 

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