ECB Papademos: Monetary Policy Can Help Financial Stability

GOTHENBURG, Sweden -- Monetary policy can be used to ensure financial stability, defusing asset-price bubbles and other risks, European Central Bank Vice President Lucas Papademos said Wednesday.

Interest rate decisions should be used in coordination with other regulatory tools, Papademos said during a panel discussion at a financial conference in Gothenburg.

ECB governing council member and head of the German central bank Axel Weber, another member of the panel, agreed. He said price stability, the ECB's main priority, and financial stability are intertwined.