ECB's Coeure says no deflation in euro zone, but sees the risk

FRANKFURT (Reuters) - There is no deflation in the euro zone at the moment, but the European Central Bank sees such a scenario as a risk and will be ready to act if needed, ECB Executive Board member Benoit Coeure said on Wednesday.

"We don't see deflation in the euro zone. We see it as a risk," Coeure said in a speech at a conference, adding that the ECB would be ready to act if needed.

Coeure also said a situation could arise where the level of excess liquidity, or money banks hold beyond what they need for their day-to-day operations, was not appropriate to the ECB's monetary policy stance and in that case the ECB may have to inject more liquidity.

But that was not necessary now, he added.

Bank have started to voluntarily repay the three-year loans they took from the ECB in late 2011 and early 2012 and the amount of excess liquidity has been declining as a result. It stood at 126 billion euros (£105.38 billion) on Wednesday.

The loans mature early next year.

(Reporting by Eva Taylor)