ECB money has failed to boost economy substantially: Rimsevics

FILE PHOTO: The headquarters of the European Central Bank (ECB) are illuminated with a giant euro sign at the start of the "Luminale, light and building" event in Frankfurt, Germany, March 12, 2016. EUTERS/Kai Pfaffenbach/File Photo

RIGA (Reuters) - The European Central Bank’s aggressive money-printing has failed to boost growth in the euro zone substantially, Latvia’s Ilmars Rimsevics said on Wednesday, the third ECB rate setter to express disappointment about the program in the past few days.

Rimsevics, Latvia’s central bank governor, blamed a lack of progress on economic reform and on the European Commission’s stimulus package for curbing confidence and lending despite the ECB’s massive injection of cash since 2015.

“This flooding of (ECB) money has helped stabilize the situation, but has not really given a substantial boost to the overall growth of economy,” he told a Latvian radio station.

Citing his own country as a case in point, Rimsevics said most of the money his central bank injected into the Latvian economy was “in bank accounts and waiting for better times”.

The ECB has extended its bond-buying scheme until the end of 2017 saying it was yet to be convinced that inflation was heading to its target of almost 2 percent.

Last week the ECB’s chief economist Peter Praet, the architect of its quantitative easing (QE) program, said the effects of the scheme on inflation had been disappointing.

Days later, Bundesbank President Jens Weidmann, a long-standing critic of QE, said central banks are largely powerless in reviving demand and warned against asking too much of them.

Reporting by Gederts Gelzis; Writing by Francesco Canepa in Frankfurt; Editing by Louise Ireland