The European Central Bank is ready to intervene if inflation remains low for too long
The European Central Bank is ready to intervene if inflation remains low for too long, President Mario Draghi said on Monday, adding that he was certain the euro zone will escape the fate of Japan.
Draghi kept his cards close to his chest, however, and declined to discuss in detail the instruments it could use to counter any prolonged weakness in prices.
But he pointed out that the reason banks were not lending to households and companies was not because they lacked funding, suggesting more long-term ECB loans are unlikely for now.
He stressed that there were no deflationary risks in the euro zone, energy boost on sale  and that monetary stimulus in the euro zone had been much stronger than it was in Japan at that time.
The ECB cut its main refinancing rate to a record low of 0.25 percent in November, alarmed after euro zone inflation fell to 0.7 percent in October. It has also injected more than 1 trillion euros into the banking system to ease funding strains.
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China's air defense zone and its territorial claims in the South China Sea have raised concerns that a minor incident in the disputed seas could quickly escalate.
China and several ASEAN nations have competing territorial claims in the energy-rich South China Sea.
A bank's capital is the money it cannot lend out and must hold as a buffer against risk, while funding refers to how it gets money that it can then lend out.
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"Excess liquidity in overnight money markets has been gradually receding. We are monitoring the potential impact of these developments on our monetary policy stance. We are ready to consider all available instruments," Draghi said.
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