ECB's Praet says in the end, countries must adjust

FRANKFURT, Oct 10 (Reuters) - The European Central Bank cannot solve the euro zone's debt problems and it is rather up to the bloc's member states to adapt and get their budgets on solid ground, ECB policymaker Peter Praet said.

Speaking as part of a panel discussion at a cash payment symposium organised by Germany's Bundesbank, Praet said the ECB had to tread a fine line between making its monetary policy work and taking incentives away for countries to reform.

"At the end of the day, societies have to adjust," Praet said, adding that monetary policy cannot solve the euro zone's problems.

The ECB last month launched a new programme to buy short-term bonds of debt-strained euro zone countries to help lower their borrowing costs in return to firm reform commitments and to ensure that its record-low interest rates reach households and companies.

The move has sparked harsh criticism especially in Germany. The Bundesbank was the only one not to vote in favour of the move and Germany's leading economic institutes warned the programme could lead to higher inflation.

Praet acknowledged criticism for the ECB's latest decision, but said there was "no easy way" to address the problem of fragmentation, the fact that the ECB's interest rates don't filter through evenly in the euro zone.

(Reporting by Eva Kuehnen and Sakari Suoninen)

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Keywords: ECB/PRAET