Knot open to new ECB tools for future debt crises

Klaas Knot says he is open to developing new tools for the European Central Bank to tackle a future debt crisis, while stressing that the ECB should be ready to use its existing measures, including bond purchases, when circumstances require them.

The former Dutch central bank chief made the comments in an interview with the Financial Times, according to Dutch news agency ANP. “If circumstances require it, we will not hesitate,” he said, referring to the ECB’s existing crisis instruments.

Knot is one of two candidates to succeed Christine Lagarde as ECB president, ANP reported. His comments come as the eurozone faces renewed inflation pressures: the article says inflation has risen again this year amid the Iran war, and that Knot has argued the ECB should remain alert to further inflation shocks.

Knot has often been described by economists as an inflation hawk, favouring higher interest rates to curb price rises. He rejects being guided by that label, saying policy should depend on circumstances rather than personalities or preconceptions. His rival for the ECB presidency, former Spanish central bank chief Pablo Hernández de Cos, has also warned of inflation risks from high energy prices and expressed concern about high public debt in some economies, ANP reported.

European leaders may decide who will lead the ECB at their next formal summit in late November, though the decision could be delayed until the following month. At least 16 of the 21 euro-using countries must agree.