ECB's ultra-loose policy may lose effectiveness over time: Mersch

October 27, 2016 1:18 PM EDT

The headquarters of the European Central Bank (ECB) are pictured in Frankfurt, Germany, September 8, 2016. REUTERS/Ralph Orlowski/File Photo

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FRANKFURT (Reuters) - The effectiveness of the European Central Bank's ultra-loose monetary policy may decline over time while side effects could increase, a key policymaker argued on Thursday, as the bank contemplates whether to extend its asset-buying program.

"The longer the measures are in place, the less effective they may become," ECB board member Yves Mersch said in a speech.

"The fact that additional lending in the euro area is losing momentum and that German banks are saying that the negative deposit facility rate is constraining lending volumes warrants attention," Mersch said. "We must be vigilant that this development does not spread to other euro area countries."

(Reporting by Balazs Koranyi, editing by Larry King)

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