ECB's Nowotny says central banks shouldn't intervene in currency markets

The European Central Bank's (ECB) Ewald Nowotny has said that central banks shouldn't intervene in foreign exchange markets, apart from the Swiss. Apparently the Swiss interventions were justified and exceptional.

Nowotny said that liquidity from the ECB can only be provided to already solvent banks. This is likely to allay fears that taxpayers will have to bail out failing institutions while the problem of Too Big To Fail persists.

The Austrian economist believes that the large deposits at the ECB reflect some uncertainty, but that money markets are now starting to work.

On forward guidance, Nowotny said that the ECB's policy would assure markets of low rates for the foreseeable future. ECB president Mario Draghi has continually stressed that monetary policy will remain accommodative (i.e. interest rates will be held down).