European Central Bank governing council member Panicos Demetriades said the bank might not have to spend a cent on government bonds. The threat of unlimited buying under the ECB's new bond purchase programme might mean that "in the end, action is not needed", said Demetriades, who heads the Central Bank of Cyprus. "No one will speculate against the unlimited firepower of a central bank," he said. "This is what stabilises currencies of countries where investors know that. One wouldn't gamble against the Federal Reserve, for example." Spanish and Italian bond yields have plunged since ECB president Mario Draghi pledged on July 26 to do what is needed to preserve the euro. Under Draghi's scheme unveiled on September 6, the ECB would spend as much as needed to contain borrowing costs in euro-zone countries if they sign up to bailout conditions first. "A central bank has this wonderful ability that no other player in the market has when it says, 'I'm going to do whatever it takes', and everyone believes that," Demetriades said. "In the end, they may do nothing." The ECB spent about €220 billion (HK$2.2 trillion) under its previous, limited bond buying programme. It cut its benchmark rate to a historic low of 0.75 per cent in July and lowered its deposit rate to zero. Asked whether the ECB could cut interest rates further, Demetriades said the governing council might not be ready to take the deposit rate into negative territory. Meanwhile, the European Union has unveiled proposals for euro-zone bank oversight that require unprecedented co-operation between the ECB and national regulators. The ECB should expand its role as guardian of the financial system by becoming the top-level supervisor of every lender in the 17-nation currency bloc. The central bank would depend on national regulators for day-to-day supervision and ensuring that banks comply with European rules, according to the proposals.