The European Central Bank's main challenge in controlling inflation is the lack of an accompanying fiscal policy instrument that would cover the entire bloc, Slovenian policymaker Bostjan Vasle said on Thursday.
The euro zone does not have a common fiscal instrument and policy instead reflects 20 separate national budgets, some of which are sometimes at odds with the goals of monetary policy.
"The best (option) is a common fiscal policy and common tools to react to the shocks in the way we are able to react with monetary policy," Vasle told a conference in Marrakech.
Although the bloc came up with a joint fiscal instrument immediately after the pandemic, Germany insists this should be a one-off tool, fearing that its taxpayers could be forced to pick up the bill for fiscal irresponsibility elsewhere. (Reporting by Balazs Koranyi; editing by Jason Neely)