At least until summer vacation starts. Two days from now.
The Bank for International Settlements, a group representing central banks including the Federal Reserve and the European Central Bank, warned political leaders on Sunday that they should not expect central banks’ cheap-money policy to hold the global economy together forever. The organization, based in Basel, Switzerland, said in its annual report that politicians should do their share of “the hard but essential work of adjustment….”
The report was published a day after a political leaders’ meeting in Luxembourg had provided a vivid example of what the central bankers were complaining about. Despite debating well into the early morning on Saturday, European Union finance ministers could not agree on new rules to reduce the chances of taxpayers bearing the burden if commercial banks collapsed.
“We ran out of time,” Michael Noonan, the Irish finance minister, told reporters as he left the meeting at about 4 a.m. “There are still core issues outstanding, so we’ll need a full meeting next week, and there’s no guarantee it will reach conclusion….”
But there did not seem to be any awareness of the limits of central bank forbearance among the 17 finance ministers in Luxembourg. The ministers pulled an all-nighter to complete their assignment — in this case, to establish a system to ensure that taxpayers never again have to pay so much for the mistakes of bankers.
The ministers have scheduled another meeting for Wednesday, a day before the leaders of the European Union’s 27 member states gather for a summit meeting in Brussels, their last scheduled meeting before the summer hiatus. The leaders have been expected to endorse the finance ministers’ decision — if there is one.