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OECD Says Eurozone Policies Are 'Behind the Curve

ByBenzinga
AuthorBenzinga
Published 05/30/2013, 08:17 AM
Updated 05/14/2017, 06:45 AM
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The European Central Bank came under fire on Wednesday after the Organization for Economic Cooperation and Development reduced its global economic growth forecast and cited the eurozone as a key reason for the reduction. The euro remained steady and traded at $1.2963 on Thursday morning.

According to the Wall Street Journal, growth in both Japan and the US is expected to be offset by the eurozone's economic struggle. The OECD cut its combined gross domestic product for all of its 34 members to 1.2 percent, down from 1.4 percent in November. The OECD also increased the amount of contraction it expects from the eurozone to 0.6 percent, rather than the 0.1 percent contraction it originally predicted in November.

The organization urged central banks to look to unconventional monetary policy decisions to help promote growth within their countries. OECD Chief Economis Pier Carlo Padoan called on the ECB to take action to curb the region's falling GDP and combat the alarming unemployment rates.

Padoan also encouraged the bank to follow through with cutting the main deposit rate below zero at June's policy meeting and suggested that the bank follow in the footsteps of the Bank of England, the Fed and the Bank of Japan by buying bonds using newly created money.

When speaking about the eurozone's efforts to create a unified banking system, Padoan criticized the eurozone's policies saying the region is often “behind the curve” due to disagreements between member states. He said the region is in need of a new banking system that will fix broken financial channels, which were a large part of the reason the OECD cut the eurozone's economic forecast.

BY Laura Brodbeck

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