ECB Should Not Pick Up Tab for Euro Crisis: Official

The European Central Bank (ECB) should not pick up the tab for the euro zone crisis by default, ECB council member Yves Mersch told CNBC Wednesday.


"It's nowhere in the mandate of the ECB to be the actor by default," Mersch, who is Banque du Luxembourg governor, said. "Acting by default would create the wrong incentives."

The ECB has intervened repeatedly to calm the bond market in recent months through buying Greek, Spanish, Irish, Portuguese and Italian bonds as fears about them defaulting on their debt repayments grew.

An increasing number of analysts believe that the ECB may have to step in on a larger scale in coming months, if the euro zone crisis continues to escalate.

"Some of the measures that we have taken are limited in volume and time and can only serve the purpose of increasing the efficiency of the monetary transmission mechanism," Mersch warned.

He joined recently departed ECB President Jean-Claude Trichet in calling for more institutions to hold the euro zone together. Trichet, who was replaced by Mario Draghi this month, specifically called for a European Finance Ministry.

"There's an institutional vacuum at the moment," Mersch said.

"At the beginning, when we discussed the Maastricht Treaty, we believed that most countries would be part of the Union and that the Union institutions would also take part in the euro zone. This is not the case."

Opponents of greater fiscal integration argue that the individual countries within the euro zone may have to surrender too much sovereignty to the joint institutions.

"We need to implement these situations by creating European institutions that are in charge of economic and fiscal co-ordination and holding together the economic side of the EMU, in order to alleviate pressure on monetary policy which can act as an actor on the policy side," Mersch added.

"(At the moment) we do not have the democratic legitimacy to do so."