FRANKFURT, Nov 21: A senior European Central Bank (ECB) governor on Friday pushed for coordinated efforts, including regulatory action, to deal with the global financial and economic crisis, saying that in the end, we learn only through our mistakes.

German central bank governor Axel Weber told the European Banking Congress here that in addition to ensuring commercial banks had sufficient liquidity to ride out the crisis, it is very important that we as supervisors also focus on the other side of the problem namely to focus on regulatory action.

There is a comprehensive need for large scale action which needs to be coordinated among the biggest countries in the world, Weber said.

The lesson is, mankind always only learns though mistakes. I’ve not seen any other formula.

In a written statement distributed before he spoke, and to which he later referred, the ECB governing council member said that owing to a remarkable decline in inflationary pressure in the medium term and rapidly deteriorating economic prospects, euro-area monetary policy in my view has enough leeway for further easing if necessary.

The central bank has lowered its main lending rate by a full per centage point in less than one month to 3.25 per cent, but analysts still say it is too timid in the face of the eurozone’s first ever economic recession.

Asked if by lowering rates too quickly, central banks were sowing the seeds for the next financial crisis, Weber said that we should avoid excessively low interest rates in periods when such low interest rates are not warranted. He is known as an ECB “hawk,” one that does not favour lowering interest rates until conditions clearly call for such a move.

But Weber added, it’s also right that we should not refrain from moving interest rates to the right position if we do not see a great problem in the medium term in terms of inflation expectations coming down and the economy cooling substantially.

The ECB governing council is widely expected to cut its main lending rate by another half per centage point at its next meeting in early December.

—AFP