Deutsche Bank CEO Christian Sewing has backed European Central Bank (ECB) President Christine Lagarde’s call for fiscal stimulus from euro zone governments.
Speaking to CNBC at the European Banking Congress in Frankfurt, Sewing supported the new central bank chief’s position that fiscal policy should look beyond just the “aggregate stance of public spending” and focus on its “composition.”
“Sometimes it’s not only about the fiscal stimulus itself, I think we should first look at the composition of where the investments are going,” Sewing told CNBC’s Annette Weisbach.
“Nevertheless, we need to invest into digital infrastructure. We need to invest in education. I think we have the strengths to do something more,” he added, suggesting that Lagarde had “found the right tone.”
Euro zone governments, particularly those with budget surpluses, have long been under pressure to spend more and thus boost the 19-member region, with the central bank having eased monetary policy to the point of all-time low negative deposit rates.
Germany and the Netherlands are both deemed to have adequate fiscal space to boost spending, but are reluctant to increase their debt levels.
In her maiden speech as head of the ECB on Friday, Lagarde proposed moving toward a “new European policy mix.”
“One key element here is euro area fiscal policy, which is not just about the aggregate stance of public spending, but also its composition,” she said.
“Investment is a particularly important part of the response to today’s challenges, because it is both today’s demand and tomorrow’s supply,”