European Central Bank President Christine Lagarde said she favours joint European Union financing for common goods such as security and climate transition.
“The ECB, at least in on my watch, has been supportive of increased fiscal capacity,” she said on Wednesday. “It’s part and parcel of what we believe would be good and better for the euro area.”
Addressing European lawmakers in Brussels, she said that “common financing is desirable, whether by way of an increased fiscal capacity or by way of joint debt. This is something that I’m sure is desirable.”
Mario Draghi, who preceded Lagarde as ECB chief, published a report on EU competitiveness this year, in which he said the bloc needs to mobilize an extra €800 billion of investment a year in order to revamp its defence spending, develop new technology and meet its goals for the energy transition. Draghi said the best way to do that is to issue more joint European debt.
Bank of Italy Governor Fabio Panetta said this week that the EU needs common borrowing to compete with the US and ensure a future of growth and innovation for the continent. But the German government has balked at the notion, concerned about the risks of putting resources in common.
Speaking in Luxembourg Wednesday evening, Bundesbank President Joachim Nagel echoed his country’s stance, saying that “financing common spending through common debt is in my view not a near-term goal.”
“Stronger fiscal rules alone are not sufficient for shared debt responsibility,” he said. “To ensure democratic decision-making structures, competencies would need to be transferred to the European level. But currently I do not see political majorities for such far-reaching institutional changes.”