Spain called on its European Union partners to give the European Central Bank the same powers as central banks including the U.S. Federal Reserve or the Bank of England to help the region overcome its economic difficulties.
“We must all ask ourselves whether the ECB should have the same powers as the rest of central banks in the world,” Prime Minister Mariano Rajoy told reporters in Madrid after meeting with U.K. Prime Minister David Cameron. “We need to give ourselves the instruments that are available in other regions. Europe is going through a decisive moment which requires setting the rules of the game clearly.”
The EU must deepen its integration process, Rajoy said. His People’s Party government is struggling to haul the fourth-largest economy in the euro area out of a six-year slump after a recession hit the currency bloc. The ECB last week left interest rates on hold as President Mario Draghi said policy makers were still weighing stimulus options.
The Fed decided this month to press on with purchases of long-term debt, a program known as quantitative easing that has ballooned its balance sheet to a record $3.21 trillion. The ECB should look at quantitative easing in an effort to revive euro-area growth, the Organization for Economic Cooperation and Development said last month.
The yield on Spain’s 10-year benchmark bond fell one basis point to 4.73 percent today, narrowing the spread with similar German debt to 3.51 percentage points. Spain’s 10-year yield rose as high as 7.75 percent in July, the highest since the single currency’s creation, before Draghi pledged to “do whatever it takes” to hold the euro together.
Spain is benefiting from improved funding conditions and the ECB’s efforts in recent months should be recognized, Rajoy said. Still, the EU should discuss the ECB’s powers along with the fiscal and banking union, Rajoy said, citing the Bank of Japan’s recent decision as a “very important change” of position.
The Japanese currency fell today to the lowest level against the dollar since June 2009 after Bank of Japan Governor Haruhiko Kuroda last week pledged to double the monetary base. The Bank of Japan says it aims to lead the nation out of nearly 15 years of deflation.