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ECB's Nowotny backs turning ESM into IMF-styled rescue fund
November 3, 2017 / 2:10 PM / 21 days ago

ECB's Nowotny backs turning ESM into IMF-styled rescue fund

LONDON (Reuters) - Veteran European Central Bank policymaker Ewald Nowotny has backed turning the European Stability Mechanism (ESM) into a IMF-styled lender and for it to take over from the ECB in Greece’s bailout program.

“(The) ESM might turn into a ‘European Monetary Fund’, and I think that makes a lot of sense,” Nowotny, one of the longest-serving members of the ECB’s Governing Council, said on Friday.

This would show “a rich part of the world is able to solve imbalances by themselves,” while the set-up might also allow the ECB to end its formal role in euro zone bailout, something it has received public criticism for.

“We are having a discussion on this,” Nowotny said. “We don’t have specific knowledge of the pension system in Greece... If we have the ESM as a specialized institution and we concentrate all these kind of surveillance tasks in the ESM. I think it will be much better.”

Nowotny also said Britain’s decision to leave the European Union meant it would no longer be part of the integration dynamic across the European Union.

“You can survive as a single country, but one has to be aware it is costly, and in a multilateral world, to have a standalone strategy is something a small country can do, like Switzerland,” he said, speaking at an event organized by the policy think-tank OMFIF.

“But in the case of Switzerland it means a lot of additional measures,” he said, highlighting the way the Swiss National Bank has had to intervene heavily in currency markets on its own.

Reporting by Karin Strohecker and Marc Jones, editing by Larry King

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