By Francesco Canepa and Gederts Gelzis
FRANKFURT/RIGA (Reuters) - It would be irresponsible of euro zone countries to leave the European Central Bank alone in the fight against an economic slump caused by the coronavirus outbreak, ECB policymaker Martins Kazaks said on Wednesday.
Finance ministers failed to agree in all-night talks on more support for their coronavirus-hit economies on Wednesday and suspended discussions until the following day.
Kazaks said the ECB was prepared to do its part, extending and expanding its money-printing programme if needed, but called for governments to chip in too.
"If policymakers leave monetary policy as the only game in town, that would be irresponsible," Kazaks, Latvia's central bank governor, told Reuters in an interview.
The ECB told euro zone finance ministers that the bloc may need fiscal measures worth up to 1.5 trillion euros ($1.6 trillion) this year to deal with the consequences of the COVID-19 epidemic, officials told Reuters.
The ECB has itself beefed up its bond purchase programme to 1.1 trillion euros this year and is offering ultra-cheap credit to banks at unprecedented rates.
Kazaks said the central bank could still increase that figure and even make use of its Outright Monetary Transactions to help individual countries if needed.
"We can talk larger volumes, other instruments," Kazaks said. "If this becomes necessary, within our mandate, we can do it."
He added the ECB would review market conditions towards the end of the year and decide whether it can phase out its Pandemic Emergency Purchase Programme and its relaxed collateral rules.
"If we see that sharp movements would be harmful then we don't do it. Then we gradually do it," he said.
But he was adamant this did not amount to direct financing of governments, which is forbidden under the EU Treaty.
"You can't draw a line," Kazaks said. "Then you (would) have to assume that the rest of policymakers...are behaving absolutely irresponsibly and that is against their citizens' interest."
The ECB effectively came to Italy's aid in March, ditching its predetermined country quotas to focus its bond-buying on Italian debt as the country became the global epicentre of the coronavirus outbreak.
Kazaks said such deviations from the so called "capital key" should be seen as "short term and operational".
He added the ECB may even manage to stay "in most cases" within a limit on owning more than a third of any one country's debt, which was de facto abandoned last week as governments increase supply.