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'Helicopter money' not on table, not needed: ECB's Villeroy

May 9, 2016 6:29 PM EDT

Banque de France Governor Francois Villeroy de Galhau listens to questions during a news conference to present the new 20 Euro banknote featuring new security characteristics at the French national bank in Paris, France, November 24, 2015. REUTERS/Philipp

BERLIN (Reuters) - The head of the French central bank told a German newspaper that "helicopter money", or free cash dished out to citizens in a bid to stimulate spending and inflation, was not being discussed at the European Central Bank and was not needed in the euro zone.

"Let's not waste any time on an issue that isn't even on the table. We haven't discussed the issue on the ECB Council," Francois Villeroy de Galhau, who also sits on the ECB's Governing Council, said according to extracts of an interview due to be published in Sueddeutsche Zeitung on Tuesday.

"Helicopter money is not necessary and I would be against it," he added.

In March, ECB President Mario Draghi was asked at a news conference about handing out so-called helicopter money to citizens and described the concept as "very interesting".

German politicians have criticized the ECB in recent weeks, complaining loudly that negative rates are hitting savers and weighing on the banking sector in Europe's biggest economy.

But Villeroy defended Draghi against grumbling from Germany, saying: "I think it's very dangerous. I share the stability-oriented culture of the Germans, but there is a misunderstanding about what stability really means today".

He also said the ECB needed to take action at times when inflation is too low - like now - because not doing so would violate the bank's mandate, adding: "Respecting laws and treaties is, quite rightly, part of German culture and that's exactly what we're doing".

Inflation has hovered either side of zero for the past year and the ECB cut its deposit rate deeper into negative territory in March when fresh forecasts showed it would miss its target of near 2 percent for several more years.

Villeroy said the increasing personalization of monetary policy was "excessive".

(Reporting by Michelle Martin; editing by Chris Reese and G Crosse)



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