King says credit easing not for central banks

Mervyn King, the governor of the Bank of England, on Wednesday rejected calls for it to devote more of its quantitative easing programme to purchases of private-sector debt, saying that this falls on the ambit of the legislature.

Parrying calls for the Bank to spend more of its quantitative-easing stockpile on private-sector assets, King said: "When it comes to buying assets which discriminate against certain sectors of the economy, there may well be very good reasons for doing that. But there is no good reason for a central bank to do that. It is for the government to do as its putting taxpayers' money at risk and that's not something which the central bank should aim to do."

The Bank has bought some private-sector debt, but the vast majority of assets purchased under the quantitative easing programme have been gilts. King argued that these purchases had involved instruments that could be bought in a "generic way", without the central bank having to judge which sectors of the economy should eligible for support.

The Federal Reserve's policy of credit easing, which Ben Bernanke, the chairman, termed in January as focusing "on the mix of loans and securities that the central bank holds and on how this composition of assets affects credit conditions for households and businesses", has led to widespread criticism from lawmakers and Fed officials.

Regional Federal Reserve presidents such as Jeffrey Lacker, the head of the Richmond Fed, and Charles Plosser, his counterpart in Philadelphia, have argued that some of its crisis-fighting measures constitute fiscal aid.