The President of the European Central Bank, Christine Lagarde, welcomed the 500 billion euro revival project proposed on Monday by French and German leaders and called for modernizing the Stability and Growth Pact.
"The Franco-German proposals are ambitious, targeted and welcome," she said in an interview given Monday to four European daily newspapers including Les Echos for France, Corriere della Sera for Italy, Handelsblatt for Germany and El Mundo for Spain.
Announced earlier by French President Emmanuel Macron and German Chancellor Angela Merkel, these measures aim to create a temporary stimulus fund fueled by European Commission loans on the markets on behalf of the 27 member states of the European Union .
The money obtained will then be returned in the form of "budgetary expenditure" to European countries and "to the sectors and regions most affected", explained the two leaders in a joint statement.
"This testifies to the spirit of solidarity and responsibility mentioned" recently by the German chancellor, said the President of the ECB, stressing that "there can be no strengthening of financial solidarity without greater coordination of decisions at European level ".
Evoking a shock "considerable, unequaled in peacetime", the number one of the Frankfurt institution anticipates "in the most severe scenario, a fall in gross domestic product of 15% in the second quarter alone" in the euro zone.
Referring to the difficulty of assessing the impact of deconfinement for each country, Ms. Lagarde considers it "probable" that in the event of a "second wave" of epidemic, the "economic fallout should be less serious, the experience bearing fruit" .
Throwing a paving stone in the pond, the President of the ECB also declared that this crisis was "a good opportunity to modernize" the Stability and Growth Pact currently suspended.
"I believe that the terms of the Stability and Growth Pact will have to be reviewed and simplified before we think about reinstating it, when we are out of this crisis," said Lagarde, calling for "re-examining" "innovative proposals". "formulated" in the past "notably by the International Monetary Fund (IMF) which she also directed from 2011 to 2019.
This Pact fixes the budgetary rules for the States having adopted the single European currency - in particular the respect of a public deficit lower than 3% of the gross domestic product (GDP) of each member country of the euro zone. On March 20, the EU announced the suspension of these budgetary rules, an unprecedented measure given the economic consequences of the coronavirus. Lagarde goes further on Monday by saying that this system should not be put back in place as it was before the crisis.
Asked about a recent decision by the German constitutional court, calling on the ECB to justify its policy of massive buyout of European public debt, Lagarde explained that the monetary institution remains "unruffled" in its objective of price stability.
On a possible refusal by the German central bank to participate in these debt buyouts, the ECB leader recalled that "all national central banks must fully participate in the decisions and the implementation of monetary policy in the euro area ".
"The ECB was given a mandate by the EU member states when they drafted and ratified the treaty. The ECB is subject to the jurisdiction of the Court of Justice of the European Union. We will continue to be responsible before the European Parliament and to explain our decisions to European citizens, "she reacted.
© 2020 AFP