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This article was published April 8, 2016 at 7:24.
the last change is the April 8, 2016 at 07:30.
the President of the European central Bank, Mario Draghi, warns of a difficult 2016 which “will raise questions as to the direction in which will go to Europe and to its resilience to new shocks.” But the ECB, “even in front of disinflationary forces worldwide, bends not an excessively low inflation,” Draghi wrote in the foreword to the annual report of the bank presented yesterday. The preliminary inflation in March was negative, at -0.1%, against a target of being below but close to 2%.
“Run the monetary union in the long run is not a luxury, it is a necessity for Europe to prosper, “said Draghi later in a speech at the Council of State of Portugal, convened by the new president, Marcelo Rebelo de Sousa. ECB President has pointed to the fact that the monetary union remains an “incomplete construction,” which continues to leave it in a fragile condition and expose the Member States to the vulnerability to shocks.
Once again, the ECB president said that the recovery is proceeding, although moderate, but without that this will allow you to rest on our laurels. It has highlighted the problem of youth unemployment and the risk of a “lost generation.”
For Draghi, the ECB did not hesitate to take action to support recovery, but this requires decisive action by part of all the actors of European economic policy. “The ECB can not by itself create the conditions for a sustainable recovery,” he said in Lisbon. And he repeated his call to governments on fiscal policy and structural reforms. The central banker acknowledged that in many countries the space in the state budget to support growth is limited and that we must avoid to widen the net of tax policy to the point where they lose credibility. But it considers that in all countries there is an opportunity to increase efforts to make the composition of the structure of taxes and government spending in favor of growth, and target spending towards investment, research and education. And without the intervention of governments and parliaments to enhance the competitiveness of the economy, he said, the eurozone will not be able to raise the growth potential and reducing structural unemployment. Dragons in particular speaks of reforms that facilitate business activity and improve productivity. In a reference to Portugal, where the current government has attempted a partial backtrack compared to the previous advances, called for further fiscal measures and warned against undoing the reforms already carried out.
Even in the summary of events and the decisions taken last year, contained in the annual report, Draghi has put emphasis on the fact that the ECB has contributed not only with monetary policy, but also by its action in the Greek case, “combating the risks to the integrity the euro area. ” This episode, according to the president of the ECB, “has highlighted the fragility of the area and reiterated the need to complete our monetary union”.
In presenting the report in Brussels, Vice President ECB, Vitor Constancio, pointed out that an area that requires particular attention is the financial sector with four possible critical elements: a further increase in the risk premium, a decline in financial asset prices, which causes loss of capital in the context of stress emerging markets and low commodity prices; The weak profitability of insurance companies and banks, for some of the latter exacerbated by impaired loans inherited from the crisis; concerns over the sustainability of the public debt and businesses; the potential for stress in the investment fund industry and in the shadow banking system in general. Constancio also repeated the appeal because the banking union is completed with the European scheme of deposit insurance, proposed by the Commission and opposed by Germany. Berlin on this aspect is hard to change position because insurance only involve a sharing of risk and time would not yet ripe for this “quantum leap.”
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