Yves Mersch, the governor of Luxembourg's central bank and a member of the European Central Bank's executive board, has exposed tensions within the ECB over the prospect of quantitative easing.
While the Bank of England and the US Federal Reserve have turned to QE to boost economies, the ECB has refrained, and it is unclear whether it is legally allowed to.
However, the prospect has been raised in recent weeks as the eurozone's stricken southern economies suffer from deflationary pressures. Peter Praet, also on the board, said last month that the ECB could use QE.
In a speech today, Mr Mersch says:
Only in exceptional circumstances may direct purchases of securities by the central bank serve to correct acute market failure. In general, however, it is preferable that market actors determine appropriate pricing.
Northern eurozone economies are far less keen on QE, and the disagreement threatens to open a wound within the eurozone, as Ambrose Evans-Pritchard reported last month. The ECB's founding mandate is supposed to be monetarist. Now we learn -- as we suspected -- that it is full of closet Hayekians.
Mr Mersch says central banks lack the skill to pick assets and value them correctly. Quoting the Austrian School guru von Hayek, he says that the free market alone has the necessary information, and that it is "social engineering" to interfere with the price system. Central banks should buy assets only in exceptional circumstances to counter stress.
Some would say that If this is the position of the ECB, it is an abdication of traditional monetary policy (dating back to the 19th Century) to use open market operations to counter deflation risks.
Hayek changed his view anyway in the late 1930s, admitting that "nature's cure" was not what he had hoped
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Three years after being saved from bankruptcy by a trio of international lenders with a €67.5bn loan, Ireland has become the first stricken eurozone state to exit its rescue programme.
Describing the crisis as the country's worst period since the potato famine, Ireland's finance minister said there must be no repeat of the debt-fuelled property spree that brought the Celtic Tiger boom to a disastrous end. "We can't go mad again," said Michael Noonan.
Ireland's announcement that it will not seek more funds from the International Monetary Fund, European commission and European Central Bank - with the rescue scheme to end formally on Sunday - was seized upon by the EC president, José Manuel Barroso, as evidence that the eurozone can stage a full recovery.
"Ireland's success sends an important message - that with determination and support from partner countries we can and will emerge stronger from this deep crisis," he said.
Greece, Cyprus and Portugal are still working through rescue programmes, which include external scrutiny of government budgets, while Spain has received funds to recapitalise its banks. Ireland's bailout - which came after the state guaranteeed the investments of depositors and bondholders in its stricken banks - was comprised of €22.5bn from each of the co-called "troika" members over three years, topped up to a total of €85bn with the country's cash reserves.
Having implemented the spending cuts, asset sales and reforms required under the bailout, Ireland has been embraced again by the debt markets that shut out the country at the turn of the decade. It has raised enough debt independently to fund itself into 2015 and has more than €20bn (£17bn) in the bank.
However relief that Ireland will officially exit the rescue programme on Sunday was tempered with warnings from Irish ministers that the policy of austerity must continue, in order to drive down the country's mountain of debt. Noonan said: "This isn't the end of the road. This is a very significant milestone on the road.
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