Bloomberg interview with Andres Lipstok

Published on the website of Bloomberg

European Central Bank Governing Council member Andres Lipstok comments on the region’s debt crisis and monetary policy. Lipstok, who heads Estonia’s central bank, made the remarks in an interview in Tallinn yesterday.

On Greece:

"I’m quite sure that all so-called problematic states will find a solution. Greek elections are ahead but I’m quite sure Greece will find a way to be in the euro area. I hope they will remain a member. But there are no guarantees."

"It’s very difficult to say for how long the crisis will last but I hope that all countries that have programs understand their problems and implement their measures. Some countries have been more successful than others."

"I hope that after the elections the new Greek government will really present some steps and fulfill the promises the previous government has made. They must implement."

On talk about a Greek exit:

"We never officially talked about an exit. Maybe there were some non-official talks of council members outside the council. We have to be very careful about what we say in order not to create any speculation, especially since we officially didn’t speak about the possibility of an exit."

"Different groups, the finance ministers for example, are speaking more openly about it and it’s understandable."

On the biggest challenge for Europe:

"We have to rebuild confidence. All these structural reforms in Greece and other countries that are struggling have to be done. Estonia is in quite a good situation, as are a lot of other euro-area countries. That means we don’t have a euro- area crisis. It’s a crisis of some member states. And these member states must do the steps they have planned. Greece is much more problematic because the elections didn’t give very conclusive results but political powers in Greece seem to understand that the next result must be clearer. But we have to accept the will of the Greek people. First of all, they have to say yes or no."

On the ECB excluding Greek banks from refinancing operations:

"It’s a short-term step, which could soon be over."

"There was no decision made to keep this step secret."

On Spain:

"Spain already presented a lot of very necessary steps and I hope Spain’s new government and the prime minister continue on this way. He understands very clearly what needs to be done and that’s a very positive thing for me. They will do all the necessary steps. No bailout."

On growth initiatives:

"All the structural reforms will lead to growth. I’m a Merkel supporter."

On ECB non-standard measures:

"We are working to fulfill our mandate. Of course, the stimulus measures can be presented if necessary and we presented. At this moment, we’re ready and looking very carefully on what’s happening in the market and if necessary we present these measures again. At the moment, there’s no need."

"We have a lot of possibilities to intervene in the market. But every intervention needs a Governing Council decision. We are ready to discuss. We’ve talked about these measures before and if necessary we continue this discussion. But every new decision will come via the Governing Council. And now it’s not very necessary to present any new measures."

"We haven’t talked about any new measures that we haven’t used before."

On interest rates:

"We didn’t discuss cutting rates below 1 percent in our meetings. If people have discussed this outside the meeting, I don’t know. I think it’s technically possible but it needs some preparation work."

"It wasn’t on the table so it’s difficult to say who’d be in favor and who wouldn’t. First, we need some information on whether the transmission channels are working or not. The first half of the year is meant for analyses."

On the growth outlook:

"It’s clear that the outcome for the beginning of the year was better than we expected, and the logical conclusion is that the figure for this year should be better. But does that mean the risks have significantly diminished? I can’t say that. Up to the moment, it’s not clear what was behind these nice figures."

"My worry-level is similar to that from the beginning of the year. It’s too early to say that I worry less."

On the inflation outlook:

"Inflation risks are coming down. The outlook now is a bit better than it was at the beginning of the year."

On Estonia adopting the euro:

"It was the right thing to do. Estonia is a small country. And fortunately our economy is on the right track and in order. The euro has given us a lot of additional confidence from the market. This trust itself is quite important."

On euro-area expansion:

"I think the euro area is ready to take in new members that are fulfilling the criteria. Some of the candidates are very keen to present their convergence reports, for example Latvia. We are ready from the ECB side but I don’t know what’s happening in Brussels."

"The Greek crisis is the Greeks’ crisis. We must overcome these problems. The euro area is a successful project and it must continue."

On Estonian house prices:

"The Estonian economy is going its normal way. Despite a 10 percent increase, housing prices are still 35 percent to 40 percent below the boom-time peak. If we’re looking at our loans, they are going up very, very slowly."

On Draghi and Trichet:

"Trichet and Draghi both are very good presidents. Draghi is very active. Both are very big idols for me. Trichet was very thorough and detailed in his discussions. Draghi is thorough too but he is very active. Italian."