FRANKFURT, Mar 03, 2011 (Dow Jones Commodities News via Comtex) -- The European Central Bank could buy assets other than government bonds to deal with specific problems in the euro zone, despite its desire to wean banks off its bond-buying program.

The ECB has never "specifically said which bonds" it would acquire through its bond-buying operation, known as the Securities Markets Program, said Francesco Papadia, the ECB's director general for market operations, in response to a question at a conference Thursday in Frankfurt.

That has "opened up the possibility [of buying] other assets," although it would "need to be something very specific that it wanted to address," Papadia said.

... signs of stress are still evident in some parts of the money markets, as reflected by use of the ECB's emergency overnight lending window, which surged to a 19-month high of EUR15.801 billion Feb. 16 and has since held close to or above that level on all but two days.

The surge was connected to Ireland's effort to wind down nationalized lenders Anglo Irish Bank Corp. and Irish Nationwide Building Society, a person familiar with the matter told Dow Jones Newswires last month.

Money markets are currently "polarized" between a majority of banks that require much less liquidity from the ECB, and a minority "in some so-called peripheral countries" that "continue to crucially depend on the ECB for liquidity," Papadia said.

...Eonia, a reference money market rate calculated by the ECB, surged above 1.3% in February but has since fallen below 0.5%, fixing at 0.472% Wednesday.

"Banks with difficulty in the market must establish plans to gradually reduce their dependence on the Eurosystem function," he said.

Papadia declined to comment on the effectiveness of the Securities Markets Program, under which the ECB has bought EUR77 billion in government bonds since last May. Some observers have criticised the program for having little impact on peripheral euro-zone bond yields.

Trichet is likely to be asked about the problem of banks being too dependent on ECB support and the surge in use of the ECB's emergency overnight lending window at a press conference later Thursday.