The European Central Bank's latest effort to stimulate the euro zone economy may not be effective and could instead hold back growth, the chairman of Dutch bank ING said on Saturday.
The ECB on Thursday announced a new quantitative easing program in a bid to boost growth. The measures include buying 20 billion euros ($22 billion) worth of securities each month, from November 1. It will go on for as long as the central bank deems necessary.
The central bank also cut its main deposit rate by 10 basis points to a record low of -0.5% — a move that essentially charges lenders for holding on to idle cash.
"We are not convinced that the current efforts of the ECB will have the required effect ... it is our impression that using this instrument now, probably the negative effects will outweigh the positive effects," ING chairman Hans Wijers told CNBC's Mandy Drury at the Singapore Summit.
"Monetary policy has its limitations and we do not assume that this impulse will create additional investments, nor will it incentivize people to consume more," he said. "Actually, it could result in a lot of uncertainty where people actually increase their savings and they will certainly not invest more."
With monetary policy "stretched" to its limits, economic restructuring and fiscal policies — such as tax cuts and government spending, are what will kick-start the European economy again, said Wijers.
Some governments such as those in Germany, Netherlands, Sweden and Finland have shown their willingness to spend more to lift economic activity, according to Wijers. But he's not sure some governments in southern Europe would do the same.
Other experts have also expressed skepticism toward the ECB's latest moves. Some pointed out that keeping interest rates in negative territory for longer will hurt banks' profitability even more.
That's despite the central bank's attempt to alleviate some pressure faced by lenders by introducing a two-tier rate system. The tiered scheme essentially permits banks to hold excess cash overnight without paying a penalty.
Still, Wijers said that move only helps banks "to a limited degree."
The ECB's announcements came at a time when the euro zone economy faces increased risk of a recession due to a manufacturing slump and dampened business sentiment as a result of Brexit and the U.S.-China trade war.
"We're close, close to a recession," said Wijers. He added that he doesn't expect Europe to enter a "deep recession" but the U.K. leaving the European Union without a deal could worsen economic conditions in the region.
In fact, how Brexit unfolds is an event that Wijers is nervous about.
"I'm nervous about Brexit itself that because of irresponsible behavior, it will be a hard Brexit. That would have a lot of negative effects," he said.