The countries of the euro area "must not take for granted" the help of the ECB on the bond market. An important warning was launched today by the governor of Bank of Italy, Mario Draghi, the next successor of Jean-Claude Trichet at the helm of the Eurotower. Frankfurt's support "cannot be used to circumvent the principles of budgetary discipline", added Draghi, increasing the dose, with clear reference to the Italian case.
What Europe needs are "credible and coherent packages, which involve a broad political commitment to strengthen competitiveness and employment on the basis of shared strategies, to strengthen the single market and increase the efficiency of public administrations".
Even if "these structural reforms could take some time to unfold their full effect - continued the Italian governor -, we must not underestimate the impact that a well-studied program could have on confidence and expectations, thus creating the conditions for a immediate increase in demand and activity”. Draghi then underlined that "the solvency of sovereign states is no longer an acquired concept" and that "governments must assume their responsibilities and act quickly to resolve the sovereign debt crisis".
Recalling the summit last July in which the countries of the euro area agreed on an extension of the operational capacities of the anti-crisis fund (EFSF), the governor defined the rapid implementation of the agreement as "crucial". However, again, “it would be a mistake to depend too much on this mechanism. Although it is important to guarantee temporary support in an emergency situation, this in itself cannot solve the public debt crisis, because it does not address its causes: the lack of budgetary discipline and the weak growth prospects".
For this reason, “the commitments undertaken by governments to restore accounting discipline must now be rigorously and rapidly implemented. In a new context in which a very negative market climate is prevailing, any sign of lack of determination could give rise to dangerous spirals, even in the absence of changes in economic fundamentals”.
To resolve the situation "there is no magic wand", but "in the euro area and in particular in some countries where growth performances have been particularly low, the potential for implementing the invoked structural reforms is very large for years,” concluded Draghi.
