The European Central Bank's unprecedented decision to use outside help for new asset purchases is stirring conflict among policymakers, highlighting the difficulty for the ECB of considering even more extreme policy action.
ECB President Mario Draghi outlined last week new programs under which the euro zone's central bank will buy asset-backed securities, which repackage bank loans, and covered bonds, secured on solid assets such as property, starting within weeks.
Concerned that individual central banks lack the required expertise, the ECB plans to employ an external bank or professional asset manager to buy the securities on its behalf, at least initially.
But within the ECB's Governing Council there are clashing views over how far it should go to revive lending in the euro zone and how these debt purchases should be carried out.
Such friction over a key tool at a time of stagnating growth and worryingly weak price pressures in the euro zone risks weakening the ECB's resolve in the fight against deflation and poses questions as to how easily it could take further steps.
These might include purchases of government bonds under a U.S.-style quantitative easing program.
German Bundesbank President Jens Weidmann has not been shy about airing his discontent over the ABS purchase plan, saying the ECB should not take risks from banks and pass them on to taxpayers. German politicians have also raised objections.
Others, such as Banque de France governor Christian Noyer, disagree with the way the ECB wants to go about the purchases, two sources familiar with the discussion told Reuters.
Noyer, who backs the ECB's ABS plan in principle, sees the big national central banks as perfectly capable of assessing the assets in question and intervening in the market.
"Noyer does not want to leave this to the private sector," one of the sources told Reuters.
The French central bank declined to comment on the matter.
A spokesman for the ECB said discussions in the Governing Council were confidential. "ABS (asset-backed securities) purchases will start in this quarter after external service providers have been selected. The procurement process is ongoing," he said in an email statement.
Deutsche Bank's asset management arm DWS has been named as a possible candidate for the ABS purchases, two other sources told Reuters. It is not clear how much such a deal would be worth.
Deutsche Bank declined to comment.
The Governing Council could take a decision at its mid-month meeting next week or at its November policy meeting, one of the sources and two separate sources with knowledge of the matter told Reuters.
The ECB said in August it had hired BlackRock Solutions, the world's largest money manager, to provide advice on the design and implementation of its ABS program.
But the decision to involve external help in the actual purchases is unprecedented.
The ECB coordinates monetary policy for the 18 countries that form the euro zone and it is the national central banks that implement the monetary policy decisions.
In the past, the ECB's market interventions were carried out through the national central banks, for example in the case of its previous covered bond purchase programs or its Securities Markets Program between May 2010 and September 2012.
Noyer told German magazine WirtschaftsWoche in September it was crucial that the assets the ECB bought would not weaken its balance sheet, saying the French and German central banks had the necessary expertise to evaluate credit risk.