ECB’s Kazimir: Council to Talk About Good Economic Outcome, but Also Recognise Fragility

16 July 2021

By David Barwick – LJUBLJANA (Econostream) – The European Central Bank Governing Council is going to discuss the improvement in the economic situation while also recognising the persistent fragility of the public health situation, Council member Peter Kazimir said Friday.

Speaking at an event organised by the Slovenian central bank, Kazimir, who heads the National Bank of Slovakia, when asked about a gradual reduction of stimulus, replied, ‘Gradual is gradual, so we are going to start to talk about the current situation, about the good economic outcome in the Eurozone.’

On the other hand, he said, the Council will also consider ‘the fragile situation … we are waiting for the third wave, maybe, and we are dealing with the delta variant in some countries … we are not out of the woods … and we are ready to adjust our policies, our tools to the situation.’

‘Definitely we are not out of the wood’, he said. Although there are currently ‘very optimistic figures’ with respect to growth and ‘financial market parameters’, including ‘how the credit is granted’, the issue is ‘the medical problem’, he said.

‘Again and again we see how fragile we are’, he said. ‘Unfortunately, the current [crisis] is still not over.’

The ECB’s new strategy did not lead to a change of mandate ‘because this is not up to us’, he said ‘It’s good that we have limited goals and roles, that price stability this is really something on the top, on the summit of our efforts. And honestly, our strategy redesign creates a strong foundation that will help us face the situation.’

Former ECB President ‘Mario Draghi’s three words – “whatever it takes” – has been a very important or key message … from the monetary union over the last 10 years’, he said.

‘The pandemic has in my view accelerated already ongoing structural changes in our economies, in our societies … going back to the old normal is not an option anymore, but further European monetary integration is’, he said.

Kazimir urged limiting the damage from and simultaneous exploiting the opportunities of the pandemic. Europe still has ‘a long, long list of uncompleted homework’, he said, with ‘urgent tasks’ including the third pillar of banking union and a new fiscal rulebook providing for ‘the enforcement of very smart, simple rules.’

‘And then of course we need the completion of capital market union’, he said, the lack of which is ‘a real weakness in comparison to the US financial market and even the UK.’

Kazimir also cited the need to transition from the ESM to a European fund serving the goal of ‘the creation of European fiscal capacity.’

‘This level of European integration is not sustainable in the long time’, he said. ‘We have to go further or go back.’

Kazimir said he was ‘quite proud’ to be part of a body – the ECB - that is ‘really decisive’.