ECB must do more to stem EU debt crisis

The European Central Bank (ECB) should do more to stem the crisis in the eurozone because the current financial facilities are not enough, the secretary-general of the Organisation for Economic Cooperation and Development (OECD) Angel Gurria said on Sunday. “If you have the ECB which can work in the markets in order to bring down maturities then why not?” Angel Gurria told a news conference during an international business and political conference in Slovenia. “The system is at stake, the euro should not be put at risk ... the EFSF and the ESM are not enough, fast enough, reactive enough,” Gurria added. He was referring to the European Financial Stability Facility and the European Stability Mechanism, the new, permanent euro rescue fund seen as a key fiscal pillar in Europe’s efforts to stem the crisis. Gurria said he “hoped and expected” Germany’s Constitutional Court would approve the ESM on Sept.12, after it was endorsed by parliament in June. Failure to approve it would almost certainly doom the ESM. Asked if the ECB should start unlimited bond buying, he said: “Yes, I believe they should, the sooner, the better.” He also forecast the eurozone would remain intact despite the current crisis. “I believe nobody is going to leave the euro and nobody should leave the euro and I believe some other countries are going to be joining the euro in the future,” Gurria said. He said Slovenia, which markets speculate could become the next country to ask for an international bailout, should focus on reforms and only consider any possible bailout after implementing reforms and reducing the deficit. “If you (Slovenia) have done everything that you need to do, the banking reform, the state-owned enterprise reform, the pension reform, the labour reform ... and still the markets are attacking than I would say, yes, let’s ask the family to help,” Gurria said. The OECD is an organisation that consists of 34 countries, including the US and Western European nations. Germany, Europe’s largest economy and the biggest contributor to the region’s many bailouts, believes they are inflationary, and the ECB’s priority is to keep inflation under control. The ECB is also forbidden to lend money to European governments under its constitution. And Bundesbank head Jens Weidmann, one of 17 eurozone central bank chiefs involved in ECB policy, has said any bond-buying plans risked making central bank financing “addictive like a drug” for struggling eurozone governments. Gulf Today