ECB has no moral right to inject any liquidity in Europe, if it is only going to increase the distortions

Sir, I refer to Peter Spiegel’s “ECB defends crisis bond-buying in high-level legal hearing” October 15.

The credit-risk weighted capital (equity) requirements for banks distort any liquidity injection of the ECB in Europe. And so, while the ECB seem to not care one iota about that, they have not earned the moral right to buy bonds, most especially sovereign or other “absolutely safe” bonds that are anyhow so much favored by these regulations.

No ECB, instead of buying “absolutely safe” bonds should allow bank to in relative terms hold less capital against exposures to the “risky”… since there is where new liquidity could do the most good.

Europe… it is dangerous to overpopulate safe havens, and equally dangerous to under explore the more risky but perhaps much more productive bays.