Dinner napoli
Milan , October 1, 2014 – 21:08
” Often in Italy and the Eurozone we have a feeling he faces a Herculean task to boost growth and reduce unemployment. ” And “just like Hercules, which compares with the hydra, it sometimes seems that as soon as we overcome a challenge – as the sovereign debt crisis – now sprouting two new tests, such as low inflation and a weak recovery”: the words of the president of the Central Bank European, Mario Draghi. Inspired by the Hall of Ercoli (“an appropriate name for the current situation”), the Royal Palace of Naples, where in the evening we met the Governing Council of the ECB for the official dinner on the eve of the monthly monetary policy meeting.
This is the third time that the governors of the European Central Bank are in Italy, the first in Rome in 2003, when the summit was Dutchman Wim Duisenberg, then in 2009 in Venice, Mario Draghi when he was governor of the Bank of Italy. The metaphor continues, pointing out that while Hercules cut off the head of the hydra while his nephew cauterized the neck, Draghi stressed that the euro area needs to do the same thing: tackling the problem at the surface and at the root.
Double challenge
The challenge for the Eurozone is twofold: cyclic, because the demand is too low; and structural, because the potential for growth is insufficient. Only if the two aspects will be addressed at the same time, you will be able to achieve sustainable growth, says Draghi. The refrain is always the same: each institution needs to do its job and keep its commitments. What the ECB is to bring inflation back near 2%, reminiscent of the Dragons (today it is the Eurozone average of 0.3%). And on Thursday, the Council will discuss how to approach that goal, revealing details on the new program for the purchase of securitized loans, the so-called Abs, which may have a size of about 100 billion.
“Structural reforms to restore confidence»
Monetary policy alone will not be enough. “At this point in the cycle, the key investments are higher,” insists the Dragons. He explains: monetary policy can play an important role in lowering the cost of capital. But investment also depend on the certainty of public accounts. And the low interest rates will not encourage businesses to invest if their returns are reduced by increasing taxes, or eaten by the hidden costs associated with unnecessary regulations. Therefore, budgetary policies and structural need to do their part. The central theme? It is “restore confidence.” Given the high public debt in many countries of the euro, only thanks to structural reforms that increase growth, and thus the sustainability of the debt, you can create space for future use with fiscal policies, said Draghi. That speaks for the euro area, “and perhaps especially for Italy.”
The stored Germany
Finally a jab to the resistances of Germany, which is at the level of government that of the Bundesbank, opposes the ECB’s unconventional measures. “As Jean Monnet said, we should not sit on the opposite sides of the table as enemies. But we should all sit down as a partner at the same side of the table, with our challenges – high unemployment, low growth and low inflation – on the other side of the table. ” “The European table – continued Dragons – not a negotiating table where each country, each institution brings its own problems. It should be a familiar table where everyone sits looking for a solution to our common problem. ” The president of the German central bank, Jens Weidmann, who openly criticized the measures Draghi, is served. And maybe not just him.
October 1, 2014 | 21:08
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