UPDATE 1-ECB's Gonzalez-Paramo plays down bond buying plans

Published 11/12/2010, 04:52 PM
Updated 11/12/2010, 04:56 PM

* Gonzalez-Paramo says ECB bond buying not comparable to QE

* Says ECB in charge of monetary policy, not fiscal policy

(Adds quotes, details)

By Martin Roberts

SARRIA, Spain, Nov 12 (Reuters) - A senior European Central Bank member suggested on Friday the bank had no plans to step up its purchases of euro zone bonds, saying its debt buying was not comparable to those of the U.S. and British central banks.

The ECB has spent a total of 64 billion euros buying bonds since May, but the pace of purchases has dropped off and the bank has been reluctant to buy the debt of crisis-hit euro zone countries like Ireland and Portugal.

"This programme is not comparable to American or British quantitative easing," European Central Bank Executive Board Member Jose Manuel Gonzalez-Paramo said when asked why the bank was not buying more peripheral euro zone debt.

"We are in charge of monetary not fiscal policy," he told reproters before giving a speech in northern Spain.

Last week the U.S. central bank announced a new programme of quantitative easing, in which it intends to buy $600 billion of U.S. government securities through the middle of next year in an effort to bolster the economy.

Gonzalez-Paramo welcomed a statement from France, Germany, Italy, Spain and Britain at the G20 summit in Seoul that confirmed debt holders would not take a hit if the EU proceeded with plans to introduce a new mechanism allowing crisis-hit countries to restructure their debt.

He said it was up to each member of the European Union to decide whether it needed financial aid from the EU's current aid facility, declining to comment on whether Ireland was seeking financial assistance.

During his speech, Gonzalez-Paramo said the euro currency zone was not in crisis but lacked a framework for its members to coordinate fiscal and macroeconomic policies

He predicted that the gap in economic growth rates between different countries in the euro zone would close next year. While Germany's economy is expected to expand by more than 3 percent this year, growth in Spain has stagnated.

(Writing by Fiona Ortiz; editing by Noah Barkin)

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