French Presidential Candidate Hollande Adviser Signals Softer Stance On ECB

A key adviser to Francois Hollande, the socialist candidate in French presidential elections, praised the work of the European Central Bank during the crisis Wednesday, indicating a softening of the socialist stance on the Frankfurt-based institution.

"Fortunately the ECB was there over the last few years as it is the only [institution] that has taken decisions that were applicable," Michel Sapin told journalists at a briefing in Paris. Sapin is a former finance minister and a close ally of Hollande's, who helped the Socialist candidate draft his program.

Hollande, who opinion polls consistently show beating current President Nicolas Sarkozy in Spring elections, has riled Germany and other European countries with a pledge to reopen negotiations on the December pact for greater fiscal discipline and convergence. Hollande wants to see a greater emphasis on growth and jobs in the pact, and says in his program that he would reorient the ECB in that direction.

The comments in the program suggest Hollande, if elected, would push for the ECB to step up its purchases in markets, taking it beyond its inflation-fighting role.

Since Hollande published his program, the ECB has conducted its second massive injection of long-term liquidity into Europe's banking system, helping to calm financial markets. Over the last three months banks have received over EUR1 trillion in cash from the central bank to unfreeze interbank and sovereign credit markets.

"We don't want to go into other mechanisms that have disadvantages even if we want the ECB to be very active. And it is already, much more than it was," Sapin said, when asked about the different approaches of central banks to bond buying.

Sapin insisted the Socialists will nevertheless push for a change to the pact signed in December.

"If we want to be credible on markets today, we must have growth prospects, which accompany prospects for a reduction in debt. One doesn't go without the other," Sapin said.

And he also argued that as countries fight to bring down deficits and debts, they have no room to stimulate growth on a national level.

"In many European countries, the possibility to stimulate growth is zero. The only area where there is the capacity to finance growth policies is the European area," he said.