ECB at risk of being overburdened: Villeroy

August 31, 2016 9:34 AM EDT

European Union (EU) flags fly in front of the European Central Bank (ECB) headquarters in Frankfurt, Germany, December 3, 2015. REUTERS/Ralph Orlowski/File Photo


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FRANKFURT (Reuters) - The European Central Bank must not be overburdened and others, particularly governments, need to start playing their part to make growth sustainable, French central bank chief Francois Villeroy de Galhau said on Wednesday.

Villeroy, who sits on the ECB's rate setting Governing Council, also said that the ECB needed craft policy with caution, mindful of the negative effects of sub-zero interest rates, particularly on bank profitability.

"Europe needs more sustainable growth and all economic policies must contribute to this objective," Villeroy said. "Monetary policy cannot and should not be overburdened, even as too many governments are currently tempted to do so."

To solve the bank sector's troubles, the high level of non performing loans needed to be reduced and more cross border consolidation is required, Villeroy added.

(Reporting by Balazs Koranyi and Frank Siebelt; Editing by Toby Chopra)



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