ECB’s Holzmann: Policymakers Must Ensure Their Instruments Will Really Work
22 May 2023
By David Barwick – VIENNA (Econostream) – Policymakers should make sure that their tools will actually work as intended, and policies should be designed to mitigate any reluctance to deploy them, European Central Bank Governing Council member Robert Holzmann said Monday.
In remarks opening the annual Economics Conference of the Austrian National Bank, which he heads, Holzmann called the absorption by UBS of Credit Suisse ‘a wake-up call to regulators around the world.’
‘Let me stress that, from the point of view of the euro area, the US and Swiss experiences leave absolutely no room for Schadenfreude, nor for complacency: we need to make sure now that our tools are fully functional, rather than mere paper tigers’, he said.
‘In order to be robust and resilient, policies must preclude any inability or unwillingness on the part of policymakers to use the full arsenal of tools when push comes to shove’, he said. ‘Reneging on such policies would only fuel moral hazard.’