ECB tells governments to look to reforms, not bank help

Financial market expectations that the European Central Bank will again charge to the eurozone's rescue were "one-sided" and governments should focus on structural reforms instead, a top ECB official said on Wednesday. "For me ... the most important instrument for solving our current problems are structural reforms," ECB executive board member Sabine Lautenschlaeger told a banking congress in Frankfurt.
"Without structural reform, nothing will be achieved in the medium or long-term in countries which are suffering from poor competitiveness," she said. She was responding to questions about recent remarks by ECB president Mario Draghi in which he appeared to hint that the central bank was ready to unleash new weapons in the eurozone's fight against deflation. The ECB is "ready to adjust (its) policy stance further" and "will use all available instruments needed to ensure price stability over the medium term", Draghi had told a central bank symposium in the United States. The remarks sparked a rally on European financial markets early last week amid speculation the ECB is about to embark on a policy of "quantitative easing" or "QE", which is a programme of an unlimited purchase of bonds. It has already been used by other central banks such as the US Federal Reserve or the Bank of England. But Lautenschlaeger played down such speculation.