“The ECB cannot and should not turn a blind eye to risks to financial stability,” Lautenschlaeger said in Malta. “Without financial stability, it becomes quite hard to ensure price stability.” Policymakers have recently debated what role the ECB should have in maintaining stability with some arguing for broader responsibility and others making the case that it should focus on inflation only and leave stability to political authorities. Lautenschlaeger warned that the ECB’s own bond purchases, due to end in December, could also increase stability risk by reducing liquidity and distorting asset prices while its low ... (full story)