ECB contenders jointly lobby for crisis-proofed euro zone

FILE PHOTO: ECB policymaker Villeroy de Galhau, who is also governor of the French central bank, attends the Paris Europlace International Financial Forum in Tokyo
FILE PHOTO: European Central Bank policymaker Francois Villeroy de Galhau, who is also governor of the French central bank, attends the Paris Europlace International Financial Forum in Tokyo, Japan, November 19, 2018. REUTERS/Toru Hanai/File Photo

April 3, 2019

FRANKFURT (Reuters) – The top two contenders vying to replace ECB President Mario Draghi this year joined forces on Wednesday, calling on European leaders to finally enact long-delayed reforms to make the euro zone more resilient to crises.

French central bank chief Francois Villeroy de Galhau and Bundesbank President Jens Weidmann asked EU leaders to pass the necessary laws to complete the capital market union, which would better channel savings to where investment was needed and help absorb shocks.

“It is now high time to move forward and complete the capital markets union,” Weidmann and Villeroy said in a rare editorial in Germany’s Frankfurter Allgemeine Zeitung and France’s Les Echos. “Integrated capital markets can cushion shocks that hit parts of a currency area.”

Such a union would also allow equity investors to share more of the economic risk, lessening the burden on the ECB, the two central bankers argued – a key consideration as many argue that the ECB has already exhausted most of its firepower after years of stimulus.

Calls for structural reforms and the completion of the banking and capital market unions has long been the ECB’s mantra but little action has taken place in recent years, leaving the bloc vulnerable to a fresh crisis

(Reporting by Balazs Koranyi; Editing by Alison Williams)

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