Europe’s in­equal­ity highly desta­bi­liz­ing, ECB’s Draghi says

Tehran Times - - ECONOMY -

Europe’s grow­ing in­equal­ity is highly desta­bi­liz­ing and needs to be tack­led with ed­u­ca­tion,

in­no­va­tion and in­vest­ment in hu­man cap­i­tal, par­tic­u­larly jobs for young peo­ple, Euro­pean Cen­tral Bank President Mario Draghi said on Mon­day.

In­come in­equal­ity has grown among euro zone coun­tries since the global fi­nan­cial cri­sis and some mea­sures also show di­ver­gence be­tween the bloc’s richer and poorer mem­bers, a source of tension for the 19-mem­ber cur­rency bloc.

“Is this a se­ri­ously desta­bi­liz­ing fac­tor that we should cope with?” Draghi said in a rare town-hall style meet­ing with univer­sity stu­dents in Lis­bon. “Yes it is.”

“We have to fight against in­equal­ity,” Draghi in re­sponse to a stu­dent ques­tion.

Draghi, lead­ing one of Europe’s most re­spected in­sti­tu­tions, has for years called on gov­ern­ments to en­act fun­da­men­tal re­forms, ar­gu­ing that the ECB is able to prop up growth, but only tem­po­rar­ily, giv­ing gov­ern­ments a win­dow of op­por­tu­nity.

Euro­stat data has shown that only a hand­ful of coun­tries have man­aged to shrink in­come in­equal­ity since the cri­sis while it has grown sharply in places like France or Spain. Fig­ures also show the high­est level of in­come in­equal­ity in the bloc’s pe­riph­ery, like Greece, Spain and Por­tu­gal, hit hard­est by the cri­sis.

Calling con­ver­gence among euro zone mem­bers “fun­da­men­tal,” Draghi said the best way to fight in­equal­ity is by cre­at­ing jobs, which comes from an in­creased in­vest­ment in ed­u­ca­tion, skills de­vel­op­ment and in­no­va­tion.

He also called on gov­ern­ments to con­sider bet­ter in­come and wealth re­dis­tri­bu­tion poli­cies.

De­fend­ing the ECB’s ultra easy mone­tary pol­icy, Draghi said that su­per low rates cre­ate jobs, fos­ter growth and ben­e­fit bor­row­ers, ul­ti­mately eas­ing in­equal­ity.

He also re­jected calls to exit su­per easy mone­tary pol­icy quickly, ar­gu­ing that pre­ma­ture tight­en­ing would lead to a fresh re­ces­sion and more in­equal­ity.

Newspapers in English

Newspapers from Iran

© PressReader. All rights reserved.