There seems to be no end to debate over the recently released Federal...
The Belgium Finance Minister, Didier Reynders, said that Europe’s new systemic risk board (ESRB) is creating tensions with the ESB.
The ESRB was established in December in order to improve the financial supervision in the European Union (EU).
According to Didier Reynder, the Belgian Deputy Prime Minister and Minister of Finance said that the powers of ESRB need to be expanded, but the new body is already raising concerns at the European Central Bank (ESB).
He said that the objective of financial stability can conflict with the central bank’s main objective of inflation targeting. The tighter monetary policy can decline the inflation, but it financial stability can be decreased.
On the other hand, to give powers to the stresses institution can help in the financial system, but it can also increase the aspects of the inflation.
Reynders argued about the appointment of Jean-Claude Trichet, governor of the ECB, to chair the ESRB, that it will surely encourage the new organization.
He said, "We may need to see some evolution in the future in the capacity of such a board to play a more and more important role and to have more and more capacity to react".
