The European Central Bank could buy loans and other assets from banks to help support the euro-zone economy, Germany's Bundesbank said, marking a radical softening of its stance on the contested policy.
The ECB has cut interest rates to a record low and promised to keep them low for some time, having also flooded the banking system with cheap crisis loans. But the euro-zone economy is still weak and inflation remains stuck well below the central bank's target.
With the debate over possible alternative measures picking up pace, Bundesbank President Jens Weidmann said the ECB could consider purchasing euro-zone government bonds or top-rated private sector assets.
That opened the door to one of the most divisive policy options - quantitative easing (QE) - and one that the German central bank has consistently viewed critically.
ECB President Mario Draghi in Paris stressed the ECB's readiness to act should inflation come in below expectations.
For now, there was no need to act, Weidmann said, but if the outlook for inflation changed, for example as a result of a stronger euro exchange rate, the ECB could step in, most likely with another interest rate cut and possibly even QE.
Another cut of the main refinancing rate would likely push the deposit rate into negative territory, which would mean that banks have to pay to park their funds at the ECB overnight.
The ECB has so far held off from that because of possible side effects, but Finnish governor Erkki Liikanen said a negative deposit rate was no "longer a controversial issue".
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