Monetary policy risks are becoming ineffective in a world where growth is sluggish, economies are deeply interconnected and interest rates are already near zero, said a top European Central Bank (ECB) policy-maker on Saturday, 21 November.

Speaking at the University of California Berkeley, ECB executive board member Benoit Coeure called for academics and policy-makers to address issues at the root of a global economic malaise, singling out the euro zone's inability to revive domestic demand.

"The capacity of the global economy to generate growth is under question," said Coeure. "In a global zero-lower-bound environment, surplus countries hold world output down.

"If we ignore those issues, there is a risk that monetary policies may become ineffective, overburdened, and/or collectively trapped in a suboptimal equilibrium," he said.

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