Handelsblatt Interview

When is the Time to Wind Down?

119207701 Ardo Hansson Estonia Bloomberg
Ardo Hansson sees clearly: Time to start winding down. Source: Bloomberg

The European Central Bank is nearing one of its most important decisions in a delicate process: winding down the massive amount of stimulus it has been injecting into the euro zone economy over the past few years.

The biggest question facing the ECB’s governing council when it meets next Thursday: Should it set a date for the end of a trillion-euro bond-buying plan that has been running since March 2015? Or should it simply start the process by cutting the amount of government and corporate debt it buys per month, and leave the final end-date for the program open?

Ardo Hansson, head of the Estonian central bank and a voting member of the ECB’s governing council, said nothing has been decided yet. But in an interview he said that the direction at least is clear. “I would personally like to see that we are on a clear path to reducing the level of such purchases,” he told Handelsblatt. “What precise date [and] which precise form is still open…but I wouldn’t want to see us several years down the road still thinking about continuing with these purchases.”

At the same time, Mr. Hansson urged financial markets not to spend too much time focusing on the bond-buying program alone. Just because the ECB stops buying bonds doesn’t necessarily mean it will be less accommodative. “You could easily see reducing the level of purchases but partly compensating by doing something else in other areas,” he said.

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