BRUSSELS/ROME (Reuters) - Economic imbalances within the euro zone risk destabilising the currency bloc, top European Central Bank officials said on Monday, stressing the responsibility of governments to help boost growth while respecting EU rules.
ECB President Mario Draghi and board member Benoit Coeure also acknowledged the limitations of the ECB's ultra-expansionary policy of low interest rates and money printing.
"In our Economic and Monetary Union, in particular, the economic governance framework is essential to avoid imbalances that would eventually risk destabilising the euro area," Draghi told a European parliamentary committee in Brussels.
"And for the euro area to thrive, actions by national governments are needed to unleash growth, reduce unemployment and empower individuals, while offering essential protections for the most vulnerable."
Draghi has long called for greater spending by countries which still have fiscal space, but his appeal has fallen on deaf ears as Germany, the country with the biggest surplus, is reluctant to end its commitment to balancing the books.
Echoing his comments, Coeure told an audience in Rome that if governments failed to play their role, the euro zone risked a long period of weak economic growth and low central bank rates.
"Moving from interest rates being 'low for long' to being 'low forever' would severely limit the room for manoeuvre for conventional monetary policy tools, but even more worryingly, it would threaten the contract between generations as well as risk tearing up our social fabric," Coeure said.
With inflation still hovering near zero, the ECB is weighing tweaks to its 1.74 trillion euros ($1.96 trillion) money-printing program, which is due to end in March at the earliest.
But the ECB's negative deposit rate and aggressive asset purchases since 2015 have already come under fire, particularly in richer countries such as Germany and the Netherlands, for eating into banks and pension funds' profits.
While defending the ECB's stimulus policy, Draghi and Coeure acknowledged it had side effects.
"If no other policy is in place, the length of time for the effectiveness of our monetary policy will be longer," Draghi said.
"Now this is not without a cost; it's pretty clear that very low interest rates for a very long time do have side effects, that especially affect financial stability."