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Christine Lagarde called on European governments to cooperate more closely in order to stimulate the stuttering economy of the euro zone during its first public appearance as the elected president of the European Central Bank.
Lagarde, who is to succeed Mario Draghi at the Frankfurt institution this fall, made the remarks in a speech to the European Parliament Wednesday as part of her appointment process.
She told MEPs that "central banks are not the only game in town", adding that "it is clear that we must cooperate if all institutions in Europe – and the euro area in particular – want to respond to the threat of populism ".
Noting that she was present when Mr Draghi promised to do "all the right things" to save the eurozone at the height of the 2012 sovereign debt crisis, Lagarde said: " I hope I will never have to say such things – – Because if I do, it will mean that other economic decision makers have not done what they do must do. "
Some governments "have the ability to use the fiscal space available to them. . . the majority of eurozone countries, "she said.
His comments come in the expectation of a new wave of monetary easing expected from the ECB next week, which could include a reduction in interest rates in negative territory and the revival of its bond purchase program of 2.6 million euros.
Other major central banks, including the United States, have recently decided to relax their policy. Some economists were warned that monetary policy was losing its effectiveness as interest rates reached record highs; As a result, German and foreign governments are increasingly encouraged to ease the burden by launching fiscal stimulus.
European Commission officials have recently announced the possibility of rewriting the bloc's Stability and Growth Pact, which has been criticized for its difficult budget rules.
Mr Draghi has repeatedly insisted that eurozone governments should not rely solely on monetary policy to save the bloc economy. But the subject of tax reform is extremely controversial.
Lagarde, who, if approved by MEPs, is expected to take over the ECB on Nov. 1, announced that she intended to continue Draghi's policy. "A very accommodative monetary policy" remains necessary to meet short-term challenges over a prolonged period, she said.
Other countries that do not have the fiscal capacity to increase spending could instead implement structural reforms to improve their financial strength, she added.
Lagarde said that her main stay at the ECB would be to make climate change a macroeconomic priority. The central bank could "direct" its purchases of corporate assets to green bonds, she added.
The former director of the IMF, who previously held the post of French finance minister, said she supports calls for the ECB to review its monetary policy strategy, including clarifying its objective of improving its monetary policy. inflation close to 2%, but lower than this.
She said, "What is the meaning of near, but less than 2% – are we talking about 1.6 or 1.9 [per cent]? There is clearly a flexibility between the two.
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