Lagarde urges eurozone governments to coordinate fiscal stimulus plan
The ECB president defends a stimulus plan in the region while the agency evaluates the pros and cons of issuing a digital currency
The president of the European Central Bank (ECB), Christine Lagarde, has argued that the application of a concerted plan of fiscal stimuli in the Eurozone would accelerate the growth of the region’s GDP, which the issuing institute foresees of 1.1% in 2020 and 1.4% in 2021.
“A stimulus plan agreed at the level of the euro zone would help accelerate growth,” says Lagarde in an interview with the French magazine Challenges, where she defends the “sense” of making use of all available tools to boost growth, which would also mean that inflation approached the ECB target, slightly below 2%.
In this regard, Lagarde defends that the implementation of a “significant” fiscal stimulus plan has been one of the reasons why the growth of the United States has been greater than that registered in the euro zone, in addition to the lower fiscal restrictions, the faster sanitation of its banks and the privilege of the dollar as an international reserve currency.
Thus, the president of the ECB is committed to a mix in which monetary policy would maintain price stability and fiscal policy should be used, in countries where possible, as support for it, while structural reforms would increase growth potential of the euro economies.
“Greater cooperation between the competent authorities, without infringing the independence of their functions, would allow optimizing the multiplier effects of their decisions,” she adds.
Impact of digital money
On the other hand, Lagarde reiterates that the ECB continues to evaluate the pros and cons of issuing a digital currency with the aim that citizens can make use of money from a central bank when the use of physical money eventually decreases, similarly to what happened at the end of 2019, the institution created a working group that collaborates with the national central banks.
In this regard, Lagarde recognizes that this hypothesis could have significant implications for the financial sector, as well as for the transmission of monetary policy.
In any case, the ECB president believes that the perspective of this type of initiatives by the central bank should not discourage or expel those solutions led by the private sector to achieve faster and more efficient payment systems.
Source: dpa
