One trillion in the field to revive bank lending in southern Europe, ward off the risk of deflation and trim down a recovery that does not take off, with the unanimous commitment of the ECB to further measures if prices do not gain speed. But Mario Draghi, who presides over an unusual ECB council in the picturesque setting but highly symbolic of the crisis that is Naples, refer to the accusations all’Eurotower the responsibility for the crisis “is not the fault of the ECB” , who has avoided the collapse of the system and nothing can if you do not back the confidence of households and businesses. Markets, however, is not enough: European exchanges ‘burn’ 222 billion, with Piazza Affari that leaves 19 on the ground marking a 3.9% , followed by Paris (-2.8%), Frankfurt (-1.99%) and London loses 1.69%.
In two days in Naples between meetings with the President of the Republic Giorgio Napolitano and between protests contained by an impressive array of law enforcement, as expected, the ECB left rates on hold at 0.05% , and outlined its program of purchasing Abs, securities that bundle loans to households and businesses (with an exception to include Greece and Cyprus), and bank bonds in mid-October. And ‘the concluding part of the package in June – along with negative rates and maxi loans’ Tltro’ – that alone, in the estimates of the ECB, a potential of 1,000 billion euro.
A figure can to reset the hands of the financial statements of the ECB at record levels in early 2012, more than 3,000 billion from the current just over 2,000. Much will depend on the response of households and especially businesses and as these, especially the SMEs, they will ask for credit to invest. And then, at relapse, the conditions that governments are called upon to create in order to restore aggregate demand – structural reforms of labor and product markets, fiscal consolidation pro-growth by lowering taxes. The goal is to create enough money supply to be traced back to the Eurozone inflation from the current 0.3%, but Draghi does not hide the difficulties. Inflation expectations in the medium and long term, the main yardstick used by the ECB, have worsened, and “we see that the risks have increased” assessment should be made “in the coming months, not years.”
Not only that: “Looking to 2015 – said to reporters at a press conference at the palace-museum of Capodimonte – continue to exist, the outlook for a moderate recovery” but “it is necessary, however, to follow carefully the factors and assumptions that define this evaluation” . A formula to describe the many risks, from the geopolitical, which could disrupt the forecasts and push the ECB council to move further towards larger purchases, against the backdrop of a ‘quantitative easing’, a massive program in style Federal Reserve .
DRAGONS: MUST RETURN THE CONFIDENCE IN THE FUTURE
Of the backdrop of international crisis, almost simultaneously with the President of the European Central Bank, also spoke about the number one in the International Monetary Fund Christine Lagarde. The recovery – he said – is “fragile, uneven and full of risks”, there are “worrying some clouds on the horizon, including that growth remains slow down” and there is concern that “financial excesses may increase in a context in which monetary policy alone “is not enough.” Draghi, during a press conference next to his deputy Vitor Constancio and the Bank of Italy governor Ignazio Visco and the day after seeing Napolitano and Minister of Economy Pier Carlo Padoan, without compromising in a defense tighter than usual Eurotower. The opportunity is given by the protests outside of Capodimonte and the center of the city of Naples: “I understand the reasons for the protest, given the weak state economy of the country, but I have to correct the idea that the ECB is at the root of the crisis. If we go down memory lane, two or three years (before the ECB intervened) ago the financial system was near collapse “.
Visco, sitting at his side, is also explicit and brings up the governments: in the management of the crisis there were “errors and delays,” but “the protest approaches the banks, the ECB, the ECB at the Troika, but this does not make decisions, monitor the decisions made by governments.” policy precisely where it is now, according to the ECB, the task of relaunching the application doing its part: “We have removed the uncertainty from the markets, but it remains on the real economy,” Draghi says. Visco While evoking a “design organic to the revival of investment “that calls into question the structural reforms and policies of governments.
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