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23 March 2012

BILD interview with ECB President, Mario Draghi


In response to the comment that many experts now think that the only way for Greece to become competitive again is if it leaves the euro area, Draghi said that as a matter of principle the ECB does not give any thought to a country leaving the euro area.

BILD: There is no end to the crisis in Greece. Yet again, more than €100 billion of credit is to be given to them. But isn’t the country a bottomless pit?

Draghi: The Greeks have passed very many important reforms in parliament. If they also implement these, the country has a chance to get itself out of the current downward spiral.

BILD: But the parties that reject the reforms will be the ones that win in the upcoming elections.

Draghi: To overcome the crisis, Greece needs a stable political situation.

BILD: Why should taxpayers in Germany and other euro area countries be liable if it goes wrong?

Draghi: The fact is that European taxpayers have taken on a lot for Greece. Their money must be protected. This is also why the ECB did not take part in the debt relief – because the cost would have been borne by taxpayers.

BILD: How much time does Greece have left?

Draghi: Some reforms can take effect very quickly. For example, a tax reform and better tax collection would spread the tax burden more fairly. That is a strong incentive to work more – and this will get the economy quickly back on its feet.

BILD: Many experts now think that the only way for Greece to become competitive again is if it leaves the euro area.

Draghi: As a matter of principle, the ECB does not give any thought to a country leaving the euro area. Leaving the euro area and having the possibility to devalue their own currency would not improve anything. It would not remove the need for reform. In fact, the consequences of leaving the euro area would be high inflation and instability – and, for the foreseeable future, nobody would lend Greece the money it needed.

BILD: Will the Greeks in any case have to give up their prosperity?

Draghi: Yes, they are renouncing exactly that as a result of wage cuts across all sectors. But this is still easier to do inside the euro area rather than outside it.

BILD: Is there a limit to the support? Or will it just continue like this?

Draghi: I can’t answer that. We will have to see how things develop in the country. Generally speaking, the fact remains that if we want to protect taxpayers’ money, the euro area cannot be turned into a transfer union, where one or two countries provide the money, the rest spend, and the whole thing is financed by joint eurobonds. That cannot happen.

BILD: Many parties, also in Germany, are calling for that.

Draghi: A community must be founded on trust – trust that shared rules will be adhered to, for example, with regard to budgetary discipline. That is why the new fiscal pact among euro area states is the right thing and why eurobonds would be premature.

BILD: Is the German Chancellor’s stance winning through?

Draghi: Let me put it this way: without pressure from the markets and from the Germans, much of the progress we have made in the various euro area countries would not have been possible.

Full interview



© ECB - European Central Bank


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