ECB member says any extra loans for Italian banks would be dependent on fresh data

  • Asked directly about Italian banks and a series of loans given out by the ECB, called targeted longer-term refinancing operations (TLTROs), Smets said the central bank was yet to discuss what would come after its current range of liquidity operations.
  • According to Reuters, banks in the region borrowed a combined 739 billion euros in four tenders in the ECB's second TLTRO facility but there's now concerns on what will happen after it winds down its operations.

Jan Smets, the governor of the National Bank of Belgium and a member of the European Central Bank's (ECB) Governing Council, told CNBC that any new policies to help the Italian banking sector would be firmly reliant on how the economic data plays out in the coming years.

Asked directly about Italian banks and a series of loans given out by the ECB, called targeted longer-term refinancing operations (TLTROs), Smets said the central bank was yet to discuss what would come after its current range of liquidity operations.

"We did not yet discuss, at the level of the Governing Council, what will follow, we are — as you know — a data dependent institution. At any monetary policy meeting we are considering what data which are coming in. And I can repeat that ... (we) maintain our confidence in further economic expansion of the euro area," Smets told CNBC's Joumanna Bercetche on Monday.

According to Reuters, banks in the region borrowed a combined 739 billion euros in four tenders in the ECB's second TLTRO facility but there's now concerns on what will happen after it winds down its operations. These loans are set to end in the next few years and the ECB's massive bond-buying program is due to end in December. Meanwhile, ultra-low interest rates that were brought in after the euro sovereign debt crisis of 2011 are expected to start rising again at the end of summer 2019.

However, Smets did not confirm or deny that more loans could be made available for Italian banks. These lenders are seen as particularly vulnerable due to hefty levels of bad loans and political upheavals in the country pushing up borrowing levels.

"We (the ECB) repeatedly confirmed our decisions taken a few months ago, including our forward guidance, meaning we will end the net purchase of assets ... And that is very clear forward guidance as a matter of fact for the next year and we are sticking to that," Smets added.

Smets also stated that the euro zone's central bank would be keeping "very important" monetary accommodation going forward "in order to be sure that inflation expectations are consistently anchored."