BRUSSELS (Reuters) - Coordinated economic policy would produce more growth and jobs in the euro zone but such coordination faces a problem of trust between governments, French central bank Governor Francois Villeroy De Galhau said on Thursday.
He said the cost of lack of sufficient policy coordination since 2010, when the sovereign debt crisis started, was several points of gross domestic product and millions of jobs for the 19-countries sharing the euro.
“There is a trust issue,” Villeroy De Galhau told the Brussels Economic Forum.
“When the French speak of economic coordination, or stronger economic governance, as they have done for decades, the Germans have very often a suspicion that it is a new French trick to avoid domestic reforms.”
He added: “Perhaps this suspicion is sometimes not completely unfounded.”
He said that this trade-off between domestic reforms and economic policy coordination at the European level, which has been there for the last 20 years, should end.
“We need both, but for that we needed a trusted institution to guarantee this end,” he said.
Reporting By Jan Strupczewski; Editing by Alissa de Carbonnel