Antonio Tajani, the European Commissioner for industry, has said the value of the euro against the dollar is currently too high, and there should be a rethink of the European Central Bank’s role so it focuses more on stimulating job creation.
Tajani told a conference in Milan that the euro at just under $1.40 is hurting “the economies of Spain, Italy, France and, in the long run, Germany”.
He wants the ECB to be more like the Federal Reserve in the US, focused not just on inflation but also on stimulus to reverse low unemployment.
At the same time, two ECB governing council members – Germany’s Jens Weidmann and Slovakia’s Jozef Makuch – have said it is ready to fight deflation, perhaps with a variation of the quantitative easing stimulus used by the Fed.
The statement from Weidmann that the ECB could buy loans and other assets from banks to help support the eurozone economy, marked a radical softening in attitude by Germany’s Bundesbank.
He told financial news website MNI that the ECB could consider purchasing eurozone government bonds or top-rated private sector assets.
“Of course any private or public assets that we might buy would have to meet certain quality standards,” Weidmann said.
“But the overall question is one of effectiveness, costs and side-effects. We are currently discussing the effectiveness of these measures. The intended effects would then have to be weighed against the costs and side-effects.”
Makuch said deflation risks in the eurozone have risen and a number of European Central Bank governing council members are prepared to take decisive steps if needed,.
He added the ECB was preparing additional non-standard measures to avoid a deflationary environment. One possibility is adding liquidity, Makuch told a news conference.
The concern is that deflation will undermine the eurozone’s economic recovery