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ECB should look at broadening out its monetary analysis: Villeroy
PARIS (Reuters) - The European Central Bank needs to rethink its monetary analysis, possibly by including indicators like financial firms’ assets and nominal GDP growth, ECB policymaker Francois Villeroy de Galhau said on Wednesday.
Monetary analysis currently plays second fiddle to economic analysis in the framework for the ECB governing council’s decisions, leading some to question whether it should be dropped.
Villeroy, who is also governor of the Bank of France, said that it could instead be broadened out as part of a strategic review underway at the ECB.
“We need to rethink our ‘second pillar’ – the present monetary analysis – notably in light of financial stability concerns,” Villeroy told an online financial conference.
Among financial sector indicators, the ECB could look more closely at the assets of financial institutions, including non-banks, Villeroy said.
But the ECB could also look at other economic indicators such as nominal growth in gross domestic product, often used to gauge how sustainable both private and public sector debt is. Employment and income distribution could also be considered.
On the current monetary policy stance, Villeroy said that it was appropriate, but added that the ECB stood ready “to act further if needed”.
Reporting by Leigh Thomas; editing by Richard Lough