By Yoruk Bahceli and Marc Jones
LONDON (Reuters) – The European Central Bank will have a discussion at some point in the future about whether it can play a role in the bloc’s plans to ramp up defence spending, policymaker Robert Holzmann said on Thursday.
The European Union is planning a joint push to raise defence spending by 800 billion euros ($867.84 billion) as it seeks to protect the region and support Ukraine amid signals from the United States that Washington plans to dial down its military backing.
Asked whether he saw a role for the ECB to finance defence spending through bond purchases, Holzmann told an event in London: “we have not discussed it yet, we alluded to it.”
Responding to a follow-up question on when a discussion may happen, Austria’s central bank head said it would take place in “future”, without specifying a time frame.
The ECB has used various bond buying programmes since the peak of the euro zone debt crisis and during the COVID-19 pandemic to help keep government borrowing costs in check.
ECB President Christine Lagarde recently played down the likelihood the bank would play a direct role in the financing effort, saying this was not the purpose of the ECB.
Germany’s parliament has also approved a massive spending plan including easing constitutionally enshrined borrowing rules to rapidly raise defence spending. The anticipated surge in borrowing has sent European government borrowing costs sharply higher this month.
($1 = 0.9218 euros)
(Reporting by Yoruk Bahceli and Marc Jones; Editing by Frances Kerry)
