Germany’s delay in ratifying the permanent European Stability Mechanism is “worrisome,” the Organization for Economic Cooperation and Development’s chief economist, Pier Carlo Padoan, told La Stampa.
“We have in front of us a long period of political uncertainty” on how to tame markets, Padoan told the Italian newspaper in an interview.
The ESM should be given a banking license, and countries like Italy that are respecting their fiscal goals should have the possibility to tap it automatically, Padoan said.
“If a country asks for aid, it shouldn’t do it explicitly” because markets would react negatively, he said. Italy is on the right track in terms of budget consolidation, though “the markets are wondering whether in the next 18 months the effort will continue,” he told the newspaper.