Crisis will have long-term impact on growth: ECB director

October 14, 2010 | 21:08

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ROME, October 14, 2010 (AFP) - A top European Central Bank official warned on Thursday that the global financial crisis will have a long-term impact on economic growth and said traditional remedies were not enough.

Officials risk falling for "the illusion that this crisis has a cyclical rather than a structural nature, and won't have a long term impact on the growth potential of our economies," ECB board member Lorenzo Bini Smaghi said.

Bini Smaghi cautioned against authorities "deluding themselves into believing that traditional policies alone are able to restore growth."

Speaking at an Aspen Institute conference in Rome, the Italian-born economist warned against launching into "unsustainable policies that produce new imbalances that sooner or later will explode.

"The stabilisation process of public finances must remain the pivot of economic politics on which we should base a profound reform of economic performance to generate more growth," he said.

Italy's Finance Minister, Giulio Tremonti, also warned against underestimating the long-term, structural nature of the crisis.

"A crisis is not a boring weekend, it is not a garden party in bad weather," he said at the conference.

AFP

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