FRANKFURT (Reuters) - Euro zone nations have little regard for their financial obligations and regularly call on an over-politicized European Central Bank to come up with a fix, outgoing ECB board member Benoit Coeure told a French newspaper.
Saving the 19-country currency union from a debt crisis half a decade ago that threatened the euro’s collapse, the ECB has invented a range of tools to keep borrowing costs down in the hope of revisiting growth and inflation.
While the ECB has largely succeeded, critics say that its new and largely untested instruments stretch the bank’s mandate, break the rules that ban it from financing governments and function as political tools because they impact income and wealth distribution.
“The politicization of the ECB results from the weakness of the political pillar of Economic and Monetary Union,” Coeure, whose eight-year term ends on Dec. 31, was quoted as saying by Libération late on Monday. “The lack of coordination in the fiscal domain means that we are the ones who are doing the work.”
“Some people accuse the ECB of doing too much and of not being democratic enough, but the excessive expectations projected onto the ECB are only a reflection of political weakness,” Coeure said.
Former ECB chief Mario Draghi, who stepped down in October after eight years in charge, repeatedly called upon euro zone governments to use fiscal policy to help support the economy instead of relying on the central bank.
The ECB also made mistakes along the way, Coeure admitted, singling out a delay in launching a bond purchase scheme five years ago and taking too long to take action on climate change.
But Coeure saved his toughest criticism for euro zone countries who have “little regard” for commonly agreed fiscal rules, thus jeopardizing the entire currency union.
Given countries’ inability to focus on their collective interest the euro zone will need a centralized budget with a powerful authority to make collective decisions about spending, Coeure said.
“For as long as that is not in place, we will have to cross our fingers and hope that no crisis occurs,” Coeure added.
Reporting by Balazs Koranyi; Editing by Catherine Evans