brussels
less than a week by a delicate constitutional referendum in Italy, the european central Bank president Mario Draghi has wanted reassuring yesterday on the impact that the outcome of the vote could have in your Bag. The experience, she noted during a confirmation hearing, demonstrates how the financial markets are capable of absorbing any shocks geo-political, the more that the Italian public debt while high is considered “sustainable” by the monetary institute.
“geopolitical uncertainty has become the most important source of uncertainty for the months to come,” said Draghi, responding in general terms to a question on the impact on the financial stability of events such as the vote in Italy, or the election of Donald Trump to the United States. “We have, however, noticed a pattern that should be repeated. The markets are in a very short period a significant reaction, which then goes down. In this sense, the markets have proved to be stronger than they prevedessimo in the past.”
the president of the monetary institute did not want to say, even though he admitted that it is difficult to assess the impact in the medium term the geopolitical events. Analysts fear that a victory of the No in the vote on the reform of the Senate could lead to new uncertainty on the future of the fragile banking sector. In this regard, the central banker declined to comment on the case of Monte dei Paschi di Siena in search of money for the urgent operation of the recapitalization.
The Italian question has been in Parliament. Some members have inquired also about the high debt of the country. The president of the monetary institute, was heard to defend Italy, noting that “according to the country’s commitment and his ability to repay the debt”, the latter is “sustainable”. “The country has one of the highest surplus in the primary,” added the central banker, pointing out, however, that despite “measures encouraging” Italy “can not fall in complacency”.
“The idea of a budgetary position of the euro area (or the fiscal stance in English, ed) is a useful criterion, but it must be stressed that it may not be binding from a legal point of view – she later claimed the president of the monetary institute, responding to another question of a member during the hearing and taking in the facts, the parts of Germany -. The member countries of the euro area continue to be bound by the Pact of Stability and Growth”.
Noting that the budgetary position of the euro area is now neutral, the european Commission has announced in the middle of the month that the fiscal stance should become moderately expansive, allowing for an increase in the deficit, the aggregate of 0.5% of Gdp (see Il Sole 24 Ore, November 17). The idea is that the countries in surplus or balanced budget to spend more than they do, while supporting the local economy. The German government has criticized Brussels, underlining its growing levels of investment.
beyond his intervention in Italy, the central banker took the opportunity of the confirmation hearing here in Brussels, the second in a week after the last Monday to deal with two major issues: the situation of the economic situation in the euro area and the consequences of the decision of the british to leave the Union. On the first front, the economist stressed the need to continue to modernise the productive fabric of europe.
“The risk of a recovery is aborted is the biggest risk”, warned the economist, by scaling a question about the dangers of a bubble caused by very low interest rates. In regard to monetary policy, Draghi has repeated in two circumstances that “the December meeting” of the board of directors “will evaluate the various options that allow us to preserve a very substantial settlement money necessary to ensure that inflation is below but close to 2% over the medium term”.
Finally, on the matter of Brexit, Draghi explained that “it is imperative to preserve the integrity of the single market as well as the homogeneity and the application of its rules”. The Ecb has therefore taken a position in favor of a hard Brexit, rather than a soft Brexit. At the same time, Draghi has urged member countries to complete the single market, regardless of the choices the british. The United Kingdom, with seven other countries – not in Italy – has received a warning because of the rising real estate prices.
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