By Shayndi Raice
DAVOS, Switzerland--UBS AG (UBS) Chairman Axel Weber warned Friday that the European Central Bank's bond-buying program, known as quantitative easing, has little power left to boost the continent's sluggish economy.
"There may be no limit to what the ECB is willing to do but there is a very clear limit to what QE can and will achieve," said Mr. Weber on a CNBC panel at the World Economic Forum here. "The problem is that monetary policy has largely run its course."
His comments came just a day after ECB President Mario Draghi signaled that the body might provide more stimulus to the European economy at its next meeting in March. The ECB Thursday also left its key interest rates unchanged, despite plummeting oil prices and growing fears over China's economic growth.
Benoit Coeure, a member of the ECB's executive board, speaking on the same panel as Mr. Weber, defended the central bank's policies. "QE is working. We've seen a tremendous improvement in the eurozone's capital markets and banking markets."
The panel more broadly discussed the new reality for banks after a bevy of regulatory changes in the wake of the global financial crisis.
Italy's economy minister, Pier Carlo Padoan, said his country plans to implement further reforms for smaller banks to encourage more capital raising. He attributed much of the banking sector's troubles to a misunderstanding of the new reality.
"We are entering a totally new world," he said. "The bail-in world is very different from the past. If you move from one world to another world, there is a transition. Not all the actors involved appreciate what the new world means for behavior."
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