Hollande calls for expanded loans role for ECB

Mon, Mar 19, 2012, 00:00

FRANÇOIS HOLLANDE, the socialist frontrunner for France’s presidency, has spoken of overhauling the European Central Bank’s mandate, saying it should provide money to the euro zone rescue fund and play a bigger role in kick-starting economic growth.

Addressing a meeting of European social democratic leaders in Paris at the weekend, Mr Hollande reiterated his plan to seek renegotiation of the fiscal treaty and called for common European bonds to stimulate growth.

Mr Hollande said the ECB had achieved its primary role in controlling inflation and praised it for providing long-term low-interest loans to banks. “But it must go further to clearly play its role as lender of last resort,” he said.

“I know this position is not shared by all in Europe. But we do not rule out changing the mandate of the ECB. Stabilising prices – that’s done. Fighting against speculation – that has yet to be done. And, above all, acting for growth. That should also be the mission of the ECB.”

Mr Hollande, who has seen his long-standing lead over president Nicolas Sarkozy narrow recently, called for the firepower of the euro zone’s permanent bailout fund, the European Stability Mechanism, to be expanded by allowing it to access liquidity from the ECB like a bank. Germany has staunchly opposed that proposal.

He pledged to bring France’s huge budget deficit under control, but warned that too much austerity was dampening the prospects for growth in the euro zone.

“This treaty is an illusion and it poses a risk . . . It creates the conditions for a lasting economic crisis which would only create budgetary imbalances once again,” he told a crowd which included the leader of Germany’s opposition SPD party, Sigmar Gabriel, and Belgian prime minister Elio du Rupo.

The Irish Government is closely watching Mr Hollande’s public comments on the treaty, as any attempts to redraft the pact would have knock-on effects on Dublin’s plan to put it to a referendum.

The weekend’s event was designed to rebut claims by Mr Sarkozy’s supporters that Mr Hollande was isolated in Europe over his stance on the treaty. With elections next year in Germany and Italy, Mr Hollande said he hoped his victory could spark a swing to the left in Europe.

Meanwhile, Chancellor Angela Merkel reportedly rues the day she agreed to Mr Sarkozy’s request to appear at his campaign rallies.

Last month, the two conservative leaders agreed on the joint election strategy. Then, without telling Berlin, Mr Sarkozy did an about-face on French television last week, telling broadcaster Europe 1: “The election in France is a French matter.”

“When Dr Merkel heard of the cancellation, she cursed the French president’s flightiness in front of close advisers,” reported Der Spiegel. At the edge of the last EU summit, the magazine reports, the German leader asked him what he was playing at. Mr Sarkozy reportedly insisted there was still a chance of one joint appearance, but was vague on dates.