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Vice president of the ECB: 'Monetary policy is not almighty we need others to act
By Caoimhe Toman
Date: Thursday 21 Nov 2019
LONDON (ShareCast) - (Sharecast News) - Luis de Guindos, Vice President of the European Central Bank (ECB), re-alerted of the limits of monetary policy on Thursday evening as he attended the 20th anniversary of Spanish media outlet Bolsamanía.
The vice president said that monetary policy "is not almighty," and asked, as he has done so on other occasions, that fiscal policy should come into play to cope with harder times.
"Monetary policy has done a lot, we have launched all kinds of actions, conventional and unconventional, but it is not almighty," said Guindos at the event held Thursday at the Thyssen Museum in Madrid.
He insisted that Central bank measures cannot be "the instrument we use to deal with" any difficulties that arise. "We need other actors to enter the play". He believes it's "fundamental" that fiscal policy "takes a leading role", especially at times like this, with such low interest rates.
"It is essential that economic and fiscal reforms continue," said the ECB vice president, who has insisted that the institution will "be there" to support European economies.
This could be ever more likely with, uncertainties regarding Brexit or the US-China trade war that are still very present. All of this was highlighted as major concerns for de Guindos.
However, he sees them as "downside risks", and has ensured that at the ECB "we are convinced that the possibility of a recession in Europe is very small." It is, as he said, "a very unlikely risk." The only risk we face is that of "reduced growth", which can be overcome if the European Union finishes doing its homework and completes the banking union and the capital market union.
He also said, "the Spanish economy will prosper. It will play a very important role and will continue moving forward in the generation of value for society."