Draghi calls for ‘quan­tum leap’ in eu­ro­zone in­te­gra­tion

Financial Mirror (Cyprus) - - FRONT PAGE -

De­scrib­ing the eu­ro­zone econ­omy as “steadily re­cov­er­ing”, Euro­pean Cen­tral Bank Pres­i­dent Mario Draghi has called for a “quan­tum leap” in in­sti­tu­tional con­ver­gence of the eu­ro­zone, ac­cord­ing to the EU news and pol­icy site EurAc­tiv.com.

A week af­ter the ECB em­barked on its quan­ti­ta­tive eas­ing pro­gramme to print money and buy sovereign bonds, Draghi said the bank’s stim­u­lus, lower oil prices and struc­tural re­forms in eu­ro­zone economies were help­ing sup­port growth in the 19-coun­try bloc.

“We are meet­ing against the back­drop of a steadily re­cov­er­ing eco­nomic sit­u­a­tion in the euro area,” he said in a speech at a fi­nance con­fer­ence.

“Most in­di­ca­tors sug­gest a sus­tained re­cov­ery is tak­ing hold,” he added. “Con­fi­dence among firms and con­sumers is ris­ing. Growth fore­casts have been re­vised up­wards. And bank lend­ing is im­prov­ing on both the de­mand and sup­ply sides.”

The ECB had helped gen­er­ate this up­turn, said Draghi. Ear­lier on Mon­day, the ECB said it set­tled EUR 9.75 bln of public-sec­tor bond pur­chases in the first week of the pro­gramme to pump more than EUR 1 trln into the eu­ro­zone econ­omy.

Un­der QE, the ECB in­tends to buy EUR 60 bln a month of mainly sovereign bonds un­til Septem­ber 2016, or be­yond if needed to see a sus­tained ad­just­ment in in­fla­tion back to­wards the ECB tar­get.

The cen­tral bank projects its plan will in­vig­o­rate a frail eu­ro­zone re­cov­ery, al­ready helped by lower oil prices and a re­vival in bank lend­ing.

But Draghi warned the cur­rency area’s economies and in­sti­tu­tions have not con­verged suf­fi­ciently.

“This is why, when­ever there is a se­ri­ous shock in any part of the euro area, ques­tions about the sus­tain­abil­ity of the union still arise,” he said, press­ing coun­tries to re­form their economies to stand on their own two feet.

Eu­ro­zone coun­tries had not yet con­verged suf­fi­ciently to dis­pel doubts about the bloc’s co­he­sion, said Draghi, stress­ing: “We have now in­te­grated too much to even en­ter­tain re­vers­ing the process - our economies are far too in­ter­twined.”

Draghi has been push­ing deeper in­te­gra­tion since early 2012, when the eu­ro­zone debt cri­sis led him and other top cri­sis-fight­ing fig­ures to work on a roadmap to­wards a bank­ing union, fis­cal union, eco­nomic union and po­lit­i­cal union.

The ECB pres­i­dent noted Europe’s fis­cal rules have re­peat­edly been bro­ken, strain­ing trust among coun­tries.

In re­sponse, he pro­posed deeper in­sti­tu­tional in­te­gra­tion, with more shared sovereignty and strength­ened ac­count­abil­ity of the EU to­wards its cit­i­zens.

“We need to move from a sys­tem of rules and guide­lines for na­tional eco­nomic pol­icy mak­ing, to a sys­tem of fur­ther sovereignty shar­ing within com­mon in­sti­tu­tions,” he said.

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.