The European Central Bank’s aggressive money-printing has failed to boost growth in the eurozone substantially, Latvia’s Ilmars Rimsevics said on Wednesday, the third ECB rate setter to express disappointment about the program in the past few days.
Rimsevics, Latvia’s central bank governor, blamed a lack of progress on economic reform and on the European Commission’s stimulus package for curbing confidence and lending despite the ECB’s massive injection of cash since 2015, Reuters reported.
“This flooding of (ECB) money has helped stabilize the situation, but has not really given a substantial boost to the overall growth of economy,” he told a Latvian radio station.
Citing his own country as a case in point, Rimsevics said most of the money his central bank injected into the Latvian economy was “in bank accounts and waiting for better times”.
The ECB has extended its bond-buying scheme until the end of 2017 saying it was yet to be convinced that inflation was heading to its target of almost 2%.
Last week the ECB’s chief economist Peter Praet, the architect of its quantitative easing program, said the effects of the scheme on inflation had been disappointing.
Days later, Bundesbank President Jens Weidmann, a long-standing critic of QE, said central banks are largely powerless in reviving demand and warned against asking too much of them.
Lawsuit
France’s top lenders are suing the ECB to get an exemption from holding capital against deposits parked with a state-owned fund, the most high-profile challenge to supervision from Frankfurt to date.
As well as providing eurozone banks with funding, the ECB has been their main regulator for the past two years, tasked with ending cozy relationships between the industry and national authorities that contributed to the financial crisis.
The Frankfurt-based institution has been sued repeatedly over its bond-buying programs and by smaller banks seeking to escape its supervision.
But this is the first case brought by major banks in the eurozone and is a rare confrontation between France’s financial elite and the ECB’s supervisory board, led by the former head of France’s own banking regulator, Daniele Nouy.
The lawsuits have been brought by BNP Paribas, Societe Generale, Credit Agricole, Credit Mutuel, Groupe BPCE and La Banque Postale over the past few weeks, filings with the European Court of Justice show.
“You are seeing banks more and more go to court to challenge the supervisor,” a senior legal source said. “Years ago that was unthinkable.”
