FRANKFURT, Jan 21 (Reuters) - 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 reforms.
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)