The eurozone should be focusing on structural changes to the labour and credit sectors rather than monetary policy, argues US asset manager Payden & Rygel.
Payden & Rygel managing principal Scott J. Weiner's comments come in response to a €1 trillion bond-buying program announced by the European Central Bank (ECB) in late January.
Quantitative easing by the ECB is unlikely to achieve economic expansion, Mr Weiner said.
“This is going to help stabilise the peripherals but in terms of driving economic activity and growth, it's just not there,” Mr Weiner said.
“We think this is much more of a structural issue.”
Mr Weiner suggested economic growth was more likely to come as a result of European companies expanding their operations.
However, he argued current labour laws were unduly restrictive.
“We know European companies do not want to hire anyone. Why? You can't get rid of them once you hire them,” he said.
“Europe has to relax their labour laws so companies can take a chance on people and hire [them].”
In addition, he said credit growth was needed to allow companies to buy new assets or open new branches.
“Banks have to be much more willing to lend to small or intermediate companies that have the possibility to grow and hire people in order to drive growth,” he said.
“It's not about buying bonds off the balance sheet.”
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