HELSINKI (MNI) – European Central Bank Governing Council member
Erkki Liikanen Wednesday echoed the calls of his ECB colleagues for more
stringent economic and fiscal rules in the EU.
“When reforming the governance of economic policies, it is
important that the EU and its member states are suitably ambitious,”
Liikanen, who heads the Bank of Finland, said in a press release that
accompanied the publication of the bank’s December bulletin.
The bulletin noted that high levels of debt and weaker competitive
positions had “sapped the markets’ confidence in many countries’ ability
to service their debts.”
The bulletin also noted that low inflation pressure in the
Eurozone, along with low inflation expectations, have made an
accommodative monetary policy possible. Hence, the full allotment at all
of the ECB’s tender operations during the crisis.
“The Banking system’s liquidity demand has been fully met and this
policy will continue to be practiced until at the least the end of the
first quarter of the coming year,” Liikanen said, reminding of the ECB’s
decision last Thursday to delay its hoped-for exit from the emergency
liquidity measures.
Liikanen, referring to a recent decision by EU leaders to begin
monitoring and enforcing new rules with regard to members’ overall
economic competitiveness, said, “public sector deficit is not an
adequate enough measure of economic fitness; rather the national economy
should be examined as a whole.”
The bank’s bulletin said the crisis had demonstrated the “massive
risks associated with an uncontrolled rise in asset prices” and asserted
that authorities have not had the proper tools to curb such rises.
“Central banks should play a central role in putting into use
measures whose effect is in calming excessive lending and indebtedness,
so called macroprudential policies,” Liikanen said.
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