ECB’s de Guindos: Lack of Central Fiscal Capacity Could Expose Euro Area to Crisis
24 July 2024
By Isabel Teles – FRANKFURT (Econostream) – European Central Bank Vice President Luis de Guindos on Wednesday said that the implementation of a permanent central fiscal capacity could contribute to crisis prevention in the euro area.
During a session at a joint conference of the ECB, International Monetary Fund and IMF Economic Review, de Guindos said, ‘Economic and monetary union remains incomplete, a permanent EU central fiscal capacity is missing in the euro area. This and other missing elements and in the EU architecture can expose the euro area to crisis as the one we experienced a bit more than a decade ago.’
The interaction between monetary and fiscal policy was key to the ECB’s strategy review in 2021, he said.
For the fiscal policy to work in the whole European Union, ‘structural policies need to address low growth prospects, improve productivity and Europe’s supply capacity’, he said.
A wide understanding of all the elements that could influence monetary and economic policy making was necessary for good results, he said.
‘High inflation, monetary policy tightening, and high levels of public debt pose significant challenges to monetary and fiscal policies at global level’, he said.