Date: Friday 06 Jul 2012
Joerg Asmussen, the executive board member of the European Central Bank (ECB), has said that the Bank's efforts to combat the financial crisis may cause governments to be less inclined to realise the necessary structural reforms.
"If short-term crisis fighting is successful, for instance through ECB actions, some of the longer-term challenges might never be addressed," he warned.
"The immediate pressure subsides, and incentives for governments weaken. More than once did we witness this during this crisis. By contrast, if the fire-fighting in the short-term does not succeed, there may not be a longer term to think about."
Asmussen insisted that the ECB should not be the ultimate recourse for the financial markets. "We must explain what the limits of our powers and mandate are," he said. "The ECB cannot compensate for what others - notably political authorities - fail to do."
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