An official with the European Central Bank (ECB) on Monday cautioned against the challenges related to quantitative easing (QE) as well as other monetary policy tools. Yves Mersch, a member of the ECB executive board, warned that it would pose huge economic, legal and political challenges for the ECB to define portfolios of government bonds of the euro area member states. Mersch made the comment when speaking of the monetary tools of ECB at a conference in Frankfurt. Unlike central governments in other places, the ECB, which is shared by 17 euro area member states, does not have a central government, Mersch said. Even the direct purchase of private securities carries risks. According to Mersch, the ECB would have to face a higher balance sheet and could be accused of transferring risks to the public sector and taxpayers. With regard to a negative deposit rate, Mersch warned that there could be costs even if it was likely to force the banks to lend more to prop up the economic recovery. Faced with negative deposit rates, financial institutions may also choose to hoard cash or transfer the costs to their customers, Mersch argued. ECB president Mario Draghi last week said the ECB was ready to consider all available instruments to help the economy without identifying a specific one. Mersch said the euro area was on its way to a gradual recovery. He echoed Draghi and said necessary tools were available should the need for further monetary measures arise.