OTTAWA (Reuters) - Europe could face a decade of stagnation unless it makes big reforms and should heed the lessons of Japan, Bank of Canada Governor Mark Carney said on Tuesday as he highlighted Japan’s bold moves to bolster growth.
In his final speech as Canadian central bank chief before taking over the Bank of England on July 1, Carney noted that Europe’s recessionary economy is being held back by fiscal austerity, low confidence and tight credit conditions.
“Deep challenges persist in its financial system. Without sustained and significant reforms, a decade of stagnation threatens,” Carney said in the prepared text of a speech he was delivering in Montreal.
“Europe can draw lessons from Japan on the dangers of half measures,” he said, adding that Tokyo had now embarked on “a bold policy experiment.”
Carney is also the chairman of the Financial Stability Board, the task force on financial regulation of the Group of 20 (G20) leading economies.
Carney, who steps down as Bank of Canada governor on June 1, made no specific reference to the British economy or Bank of England monetary policy.
On Canadian monetary policy, he broke no new ground, saying only that the Bank of Canada has maintained a rate-hike bias for the past year in part to complement the efforts of the government and the bank regulator to curb household debt.
Reporting by Louise Egan; Editing by Randall Palmer