Outgoing European Central Bank President Mario Draghi stressed in his farewell press conference that a truly eurozone budget “with an adequate size” would be the number one issue to fix in the eurozone.
Speaking to reporters after the last ECB governing council he chaired, Draghi defended his legacy, which came into question following the last monetary decisions adopted in September, including further cuts of the rate deposits and restarting the asset purchasing programme.
“Unfortunately, everything that happened since September has shown abundantly that the Governing Council’s determination to act in a substantial manner was justified,” he said pointing at the weak level of manufacturing indicators, the lowest register since the euro crisis in 2012.
Asked about one thing he would fix in the eurozone, he insisted on the idea of a common pot for the euro area members, either as a eurozone budget or a reinsurance system.
“One needs to have a central fiscal capacity,” with adequate size and a countercyclical function, he explained.
He admitted that the design of its rules would be very important in order to avoid the moral hazard that it’s blocking its inception. [...]
If central bankers and policymakers expected before that the low interest rates would return to normal levels sooner than later, it is now assumed that the exit from the unconventional monetary policy will take time, Draghi explained.
Nevertheless the Italian central banker said that the ECB monitored the markets “very closely” to detect the risk of bubbles. Even if some valuations were overstretched, he explained that it was not due to monetary actions.
Draghi once again called on governments with sound public finances to invest more, while recommending that euro members with high debt levels adjust further their economies so they can have some room for manoeuvre once the economic situation worsens. [...]
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Mario Draghi: Farewell remarks
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