European Central Bank Governing Council member Christian Noyer said Wednesday that the ECB announced “a very strong package” of measures to support the economy last week but governments must also to do their part to spur growth.
“It is necessary that governments do their job to facilitate investment and employment,” Noyer said in a television interview. “The ECB cannot do it all on its own.”
Noyer said the package of rate cuts and liquidity measures, which could inject E400 billion into the economy, will eventually spur the flow of credit.
“We are facilitating for banks loans for business investment and to households,” Noyer said. “It will be a real aid to the economy.”
Noyer also warned that US authorities risk disrupting the financial system if they bar the French bank BNP Paribas from dollar clearing operations as punishment for breaking US embargos against countries like Iran, Sudan and Cuba.
“What concerns us is the risk of disproportion between the affair and the amount of fine that may be imposed,” Noyer, who heads the Bank of France, said. “What is very worrying is something that could put in danger the proper functioning of the financial system.”
BNP Paribas is one of the world’s top dollar clearing banks and authorities have warned that its business and stability could be threatened if it is barred from dollar clearing.
The bank could also be fined as much as $10 billion, according to media reports, for its deals with embargoed countries, which mostly took place in 2006 and 2007.
Noyer said that a fine of that magnitude “could have a real macroeconomic impact” by limiting BNP’s ability to provide credit in France and other countries.