IT is up to eurozone governments, not the European Central Bank (ECB), to revive growth in the 19-member currency bloc, ECB Governing Council Bostjan Vasle said in an interview published Saturday.

The ECB has provided unprecedented stimulus for years but growth remains anaemic and policymakers are increasingly calling on governments to spend more and to lift competitiveness, taking pressure off the ECB’s already stretched monetary policy.

“Structural measures are an important, possibly the only chance in the long term, to increase economic growth,” Vasle, who is also the governor of the Bank of Slovenia, told Slovenian daily newspaper Dnevnik.

“We know that productivity growth is slowing down, that Europe is faced with demographic problems which do not get enough attention in most states. Some changes are happening faster and countries do not follow them sufficiently which is weakening their growth possibility.”

He also said the side effects of the ECB monetary policy are becoming “more obvious.”

The ECB left its ultra easy policy unchanged Thursday and markets expect no change next year as weak growth forces the bank to keep rates at record lows well below zero.

“Negative interest rates and excessive liquidity are creating pressure on the banking system, which can also be felt in the pension and other segments of financial markets,” said Vasle.

He added that the positive effects of ECB monetary policy “are still prevailing” as economic growth and inflation are higher than they would have been without the ECB measures.

He pointed out that while monetary policy over the past years tried to influence aggregate demand in many ways, other policies were less active.

“I’m thinking mainly of fiscal policy and structural measures which are necessary for growth. The gist of the problem is becoming more and more obvious.”

He said one way would be to establish joint fiscal capacity in the eurozone.

“This mechanism does not exist and this is one of the deficiencies of the euro architecture as it is not possible to rely on national policies having an eye on the advantage of the whole group at all times.”

He also said that he expected the ECB’s main focus under its new leader Christine Lagarde will remain, ensuring price stability.

“There are many challenges there, inflation is still well below the goal of 2 percent.”

(SD-Agencies)