The ECB cannot support Eurozone alone, according to Bank of England Governor

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The Governor of the Bank of England Mark Carney has cautioned that the current structure of the Eurozone makes the situation “odd”. Mr Carney stated that sharing a currency without also sharing decisions on taxes and spending is currently not working out for Europe.
The Governor of the Bank of England Mark Carney has cautioned that the current structure of the Eurozone makes the situation ‘odd’. Mr Carney stated that sharing a currency without also sharing decisions on taxes and spending is currently not working out for Europe. ‘For complete solutions to current and potential future problems the sharing of fiscal risks is required,’ he told an audience in Dublin, Ireland.

At the moment, EU spending decisions are being made at a national level. Mr Carney said that there was no coincidence that effective currency unions had mainly centralised fiscal authorities. ‘The European monetary union will not be complete until it builds mechanisms to share fiscal sovereignty,’ he said.

But it is the timing of the intervention which is striking; coming a few days after the European Central Bank launched more than a billion euros of public-sector and private-sector debt purchases, or quantitative easing, as Eurozone countries such as Germany are reluctant to provide further financial help to Greece.

Mr Carney reviewed the ECB’s actions as being ‘timely and welcome’ but warned the ‘ECB alone cannot reduce the risks of a prolonged recession. Europe needs a coherent plan to anchor expectations, build confidence and escape its debt. That plan begins but does not end with the monetary policy from the ECB,’ he added.