ECB stands ready to reduce interest rates, says Visco

Bank of Italy calls for measures to break negative credit spiral

ECB stands ready to reduce interest rates, says Visco

Rome, May 31 - Interest-rate cuts by the European Central Bank have been effective and the ECB stands ready to cut again if necessary, Bank of Italy Governor Ignazio Visco said Friday. Cutting rates to increase liquidity in the eurozone, "has proven effective," Visco told a meeting of the central bank. But more may be needed, he added. "The ECB is examining, in concert with other European institutions, initiatives to promote issues of securities backed by loans to businesses". Visco also called for measures to "break the negative spiral" in credit availability in the economy, the result of a drop in the amount of lending by nervous banks to businesses. At the same time, companies have been increasingly afraid to borrow, leading to economic stagnation.

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