World Economy

ECB Creates Task Force to Strengthen Faltering Economy

ECB Creates Task Force to Strengthen Faltering EconomyECB Creates Task Force to Strengthen Faltering Economy

European Central Bank officials have time and again griped that governments aren’t doing enough to strengthen the eurozone economy. Now they’re going a step further.

The Frankfurt-based ECB has created a task force of national central bank staff to consider economic reforms, according to people familiar with the matter, who asked not to be identified because the initiative hasn’t been publicly announced. The group, which was set up in the spring and has yet to meet, was established in response to unhappiness that governments are dragging their feet, two of the people said, Bloomberg reported.

The eurozone’s slow recovery means the ECB’s Governing Council, which holds a non-monetary policy meeting on Wednesday, has been forced to implement stimulus measures so large that its quantitative-easing program risks running out of bonds to buy. President Mario Draghi has repeatedly urged governments to support him with structural efforts and his frustration showed in April—about the time the task force was created—when he intensified his warnings.

“The ECB has no particular expertise in structural reforms but it can certainly contribute to the debate as economic growth and the supply side of the economy matter for achieving its mandate,” said Christian Odendahl, chief economist of the London-based Center for European Reform. “It should place emphasis on what kind of macro-economic impact reforms may have—that’s what it can do best.’’

 Policy Groundwork

The new group is named the “Task Force on Economic Reforms,” according to one of the people. While it will assess the impact of different concepts and report to the Monetary Policy Committee, which does the preparatory work for the governing council’s discussions, there is no intention to tell governments what they should do, another person said. An ECB spokesman declined to comment.

Task forces typically work under the committees of the European System of Central Banks, made up of the ECB and the 19 national central banks of the currency bloc, according to a document on the Bank of France website. Their duties must be clearly defined, and the governing council regularly assesses whether to maintain them. Unlike a working group, not every national central bank necessarily has a representative.

The chief concern is that the reform momentum that developed during the debt crisis is fading too soon, with the economy lacking growth potential and resilience. An aggregate indicator of the “reform drive” of the region fell to 3.3 in 2015 from 4.3 the previous year, according to a study by the Lisbon Council, a think tank, and Berenberg bank.