Draghi: See Relative Return Of Conf. In Euro Area Prospects
November 23, 2012 at 10:50 GMT
FRANKFURT – Actions by the European Central Bank and European
political leaders have contributed to a relative return of confidence in
the Eurozone, ECB President Mario Draghi said Friday.
But he stressed that the ECB stood ready to activate its OMT
bond-buying program if needed.
Speaking at the European Banking Congress here, Draghi said the
ECB’s OMT sovereign bond-buying announcement in September, as well as
moves by Eurozone leaders towards financial union, had led to “much more
benign market conditions” in the last few months.
“It is therefore that I can today address you against the
background of a relative return of confidence in the prospects for the
euro area,” the ECB chief said.
But he added: “Given that the return of confidence was related in
part to the announcement of Outright Monetary Transactions, I would like
to assure financial markets that we stand ready to implement this
program as and when required.”
In a “highly demanding environment,” the ECB has continued to exert
its mandated role, Draghi said, reiterating that the new bond purchasing
plan does not transgress into fiscal policy territory.
“Three things have been essential here. First, the ECB has not
stepped into any other roles that belong to governments – they too have
to take their responsibilities for coping with the crisis in a resolute
manner,” Draghi said. “Second, the ECB has continued to cherish its
independence. And third, the ECB has continued to deliver what it is
tasked to deliver: price stability in the euro area.”
Draghi also stressed that the ECB’s price stability goal goes in
“both directions” – ie, the avoidance of both inflation and deflation –
but he said this goal had not been enough to prevent a fragmentation of
financial markets, which “threatens the single monetary policy and the
ECB’s ability to ensure price stability.”
Draghi said the single supervisory mechanism should be implemented
in a “timely” fashion in order to address the fragmentation of financial
markets. “But above all, we need to do it well,” he added.
“What is essential is to have the legal basis as soon as possible,
ideally on 1 January 2013, so that preparations can begin,” Europe’s top
central banker said.
Draghi also stressed the benefits of housing the single supervisor
within the ECB, calling the proposal “the only pragmatic one in the
current circumstances.”
“Fourteen of the 17 national central bank governors in the
Eurosystem already have a supervisory role,” Draghi said. “Therefore,
working jointly with the national supervisory authorities, the ECB will
have the legal authority and technical capability to carry out this
complex task successfully.”
Draghi addressed the concerns that “excessive burdens” could result
from the same institution conducting monetary policy and bank oversight.
“The proposal of the European Commission provides for the
establishment of a separate Supervisory Board within the ECB, which will
include representatives from national authorities,” Draghi explained.
“This proposal allows for a pooling of supervisory expertise and
knowledge and will help to ensure that decision-making lines on monetary
and supervisory policy are clearly separated.”
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