ECB announcement “puts one leg of the stool in place” - Doherty
Sinn Féin Finance Spokesperson Pearse Doherty TD has described the ECB’s move on quantitative easing as “putting one leg of a stool in place.” He added that the other two legs of the stool - a change in fiscal policy and the calling of a debt conference are also required.
Deputy Doherty said:
“I welcome in principle this move to a more growth friendly spirit even if this shift is driven by the threat of deflation rather than any social imperatives.
“It is concerning that Ireland’s representative at the ECB Governor Honohan had no vote on this crucial decision.
“The effect of today’s announcement will be limited by the lack of any corresponding moves in fiscal policy and the debt issue. Unfortunately the EU is still firmly fixed on an anti-growth economic policy. The lack of coordination between what the ECB is doing today and what the other EU bodies are doing is holding growth back. Providing extra credit to over indebted countries will not make their debt any more sustainable.
“The nature of the proposed programme, concentrated as it is on buying assets from banks, is one of the least effective ways of getting money into the real economy particularly in an Irish context.
“The decision to nationalise the risk on 80% of the bond buying programme represents a climb down to Germany on the key issue of risk sharing. This move goes against the spirit of this ECB initiative and is a major flaw in this initiative.
“A new approach is now sorely needed on fiscal policy and debt. What Mr. Draghi has done today is to put in place one leg of a stool. The other two legs needed are a more realistic EU fiscal policy to grow the economy and create jobs, and the calling of a debt conference to actually deal with the over-indebtness of some EU countries.”