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Speaking to European Parliament’s committee on Economic and Monetary Affairs, the president of the European Central Bank defended the “strong” monetary response launched two weeks ago, due to “the more rapid and extended slowdown than previously anticipated, persistent and prominent downside risks to the growth outlook, and a further delay in the convergence of inflation towards our aim.”
But the ECB’s low interest rates, cheap credits to banks and bond-buying programmes would not be sufficient to get the European economy back on track.
“We need a coherent economic strategy in the euro area that complements and enhances the effectiveness of monetary policy,” he said. [...]
“I fully acknowledge the political difficulties in building such an instrument in the euro area. Similar difficulties also exist when discussing the completion of the banking union and the establishment of a genuine capital markets union,” Dragi told MEPs.
But he warned that “ignoring the need to fix the remaining institutional weaknesses of EMU would seriously damage what has already been achieved through the commitment and hard work of everyone involved.” [...]