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Press release
“No time for complacency”, Draghi tells
economic and monetary affairs MEPs
[17-11-2014 - 19:52]
The European Central Bank will take unconventional monetary measures if the
economic situation in the euro area requires them, ECB President Mario Draghi
reiterated to economic and monetary affairs MEPs on Monday. As the Banking
Union takes shape, risks could migrate from banks to the non-banking sector, he
warned. Also, speaking as chair of the Systemic Risk Board, he added that there is
"a vast scope for more coordination of sanctions against banks between the US and
In his regular monetary dialogue with MEPs, Mr Draghi reiterated that the ECB's balance
sheet could go up to the level of March 2012 if needed. Asked whether this was a target or
an expectation, he said that "it is an expectation" and that "if not fulfilled, other measures
might be taken".
Mr Draghi pointed out that the latest economic outlook “shows the growth momentum has
weakened during the summer and that the forecast needed downward adjustment. This
could dampen confidence and private investment in the euro area. Inflation in October is at
0.4% (the target is close to, but below 2%) and in the coming months this will probably be
the same", he said. Mr Draghi also reiterated the need for fiscal consolidation and
structural reforms to be put in place to improve the business environment.
No sub-prime in eurozone
Countering criticism that the recent launch of the programme to buy Assets Backed
Securities (ABS) might turn the ECB into a “bad bank”, Mr Draghi said that this programme
should not be compared to the American one: "We don't have sub-prime in Europe. The
default rate in the US was 18%, whereas in Europe, it is 1.5%."
"Credible backstop"
Mr Draghi warned that the monetary measures taken so far will need time to materialise,
but said “there are indications that the package is bringing benefits". Asked about further
measures he thought necessary to get the euro zone economy back on track, he
mentioned the need for to complete the Banking Union, so that the Single Resolution
Mechanism (SRM) can function as a "credible backstop". He also warned that as the
Banking Union takes shape, risks could migrate from the banks to the non-banking sector
also known as “shadow banking”.
Furthermore, he said the capital markets union needs to take shape so as "to reduce
fragmentation of national legislation and to improve lending to SMEs" and that there
should be “a long-term commitment to sharing sovereignty in monetary policy, in the
banking union and in the budgetary area”.
Letters to Ireland
Mr Draghi defended his predecessor, Jean Claude Trichet, against claims of putting
pressure on Ireland to accept a bailout in 2010. He described the Irish request to the
EU/IMF as "inevitable" and said "we should keep in mind that the bailout for Ireland was to
the amount of 85% of Irish GDP and made up 25% of the total bailout fund. The
correspondence was part of the overall policy dialogue and we saw it as our duty to the
member states providing the liquidity to ask questions ".
Press Service
Directorate for the Media
Director - Spokesperson : Jaume DUCH GUILLOT
Reference No:20141113IPR78918
Press switchboard number (32-2) 28 33000
Press release
BXL: (+32) 2 28 44659
STR: (+33) 3 881 74903
PORT: (+32) 498 98 35 88
EMAIL: [email protected]
TWITTER: EP_Economics
20141113IPR78918 - 2/2
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