Rebalancing the global economy and establishing new financial regulations should be done gradually so as not to harm the economic recovery, ECB Governing Council member Christian Noyer said today.
"The challenge is to calibrate and phase in the new framework in a way that does not impede the recovery and does not contradict our macroeconomic objectives," Mr Noyer told the Europlace Financial Forum in Paris.
"If the rebalancing happens too fast, it might weaken the recovery, but if reforms are delayed too much, the longer-run growth prospects will be affected negatively."
Mr Noyer said countries facing serious fiscal challenges should speed up the pace of fiscal consolidation, while those that had capacity should expand domestic sources of growth to help cushion the impact of a fall in demand from other countries.
Policymakers in Europe see the key to overcoming the euro zone crisis and restoring confidence mostly in strengthening and widening Europe's fiscal rules and economic surveillance.
Mr Noyer said regulation should become "truly global" given the more internationally linked financial markets, adding that the crisis had exposed "black holes" and the "shadowy banking system".
He said reforms for over-the-counter derivatives would be essential to address accumulated market risks, while policy options could also entail exchange rate adjustments.
"The presence of high and persistent imbalances in the global economy is a real issue," he said. "This does not mean of course that one should expect countries to run balanced current account positions at all times."
Reuters