FRANKFURT Jan 21 Euro zone governments hold the
key to getting out of the current crisis and they must not
reduce their efforts to shape up their economies, ECB
policymaker Benoit Coeure said on Monday.
He added that the European Central Bank could only do so
much to support growth.
Coeure said "signs of convalescence and 're-integration' in
European financial markets" since the ECB agreed its new
bond-purchase plan - dubbed Outright Monetary Transactions (OMT)
- last September should not lead governments to ease off
Previously in the 3-year-old euro zone crisis, governments
have slowed their reform efforts when market tensions have
abated and the ECB has had to step in to fill the policy gap
when renewed investor jitters drove the bloc towards break-up.
"Engineering a positive output shock will be the key remedy
to the European troubles," Coeure said in the text of a speech
for delivery in Brussels, calling for structural reforms to open
up labour markets in the euro zone.
"Despite tentative evidence for a relaxation of financial
market tensions, also in response to our recently announced
Outright Monetary Transactions programme, there is no credible
substitute for the positive output shock," he added. "And
triggering such an output shock is clearly a matter for elected
governments, at national and European level."
Coeure's comments chimed with remarks earlier on Monday from
Bundesbank chief Jens Weidmann, who said the key to handling the
debt crisis did not lie with central banks.
"What is the role of monetary policy in this context?"
Coeure asked. "What it can do is to stabilise growth near its
trend over extended horizons, but it cannot raise the trend."
(Writing by Paul Carrel)