(Corrects to say "than of" not "and of" in paragraph 6)
FRANKFURT, Oct 9 (Reuters) - The European Central Bank iskeeping a close eye on the development of market interest ratesand can step in if necessary, Executive Board member JoergAsmussen said.
"We are looking at money market rates, especially EONIA,very closely," Asmussen said in an interview with CNBC that wasaired on Wednesday.
"We will keep this in mind and if necessary we can deal witha number of instruments with the liquidity situation for thebanks," he said, adding that liquidity was "no substitute forlack in capital".
Asmussen also said it was too early for the ECB to thinkabout exiting its loose monetary policy stance.
"We are in a different situation of the business cycle thanthe U.S. is. So for us it is clearly too early to exit," hesaid.
"But when the point comes one has to be clearcommunication-wise and I'm also very much convinced that exitingis possible. For me it is more a question of political will thanof technical possibilities," he said.
Asked whether he saw a real risk of the United Statesdefaulting, he said: "To be honest I don't see this. We havelearned from our U.S. friends how to be pragmatic and I'mconvinced that they will find a solution before the criticalmoment arises." (Reporting by Eva Taylor; editing by Mike Collett-White)
- European Central Bank