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ECB's Vasle sees likely need for further action

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By Reuters

LJUBLJANA (Reuters) – Global economic conditions are very complicated, and the European Central Bank will likely have to take more action “in the coming months, quarters and years,” ECB governing council member Bostjan Vasle said in an interview aired on Sunday.

He told Radio Slovenia there were “big uncertainties, risks ahead of us” which included U.S. economic policy which he said was destroying the system of free international trade, a potentially hard Brexit and the economic slowdown in China.

There were signs that economic slowdown (in the euro zone) would last longer than the bank had expected at the start of the year, but: “we are not talking about a fall of economic growth or a recession”, said Vasle, who is also the governor of the Bank of Slovenia.

He rejected the possibility of a “helicopter money” policy – under which the central bank would distribute funds directly to households – saying: “The actions of the central bank (ECB) … have worked. They eased the conditions on the financial markets, increased demand and price growth. So for now we are keeping our present strategy.”

There was room for more action, though the central bank would have to consider the cost and effectiveness of any new move, he said. The ECB was also expecting governments to adjust their fiscal policies to the new economic conditions, he added.

Euro zone banks will have to adjust to those new conditions partly by consolidation and adapting to technological changes, Vasle told the station.

Vasle said he expected ECB’s governing council would continue to make decisions by consensus after the bank’s leadership changes – Christine Lagarde is expected to replace Mario Draghi in the top job in November.

(Reporting By Marja Novak; Editing by Raissa Kasolowsky and Andrew Heavens)