We are on the right track but there is still a lot to do. The president of the European Central Bank (ECB) Mario Draghi reiterated, in a hearing in the European Parliament, that theMonetary union must be fortified. The second quarter of 2012 was difficult for the Eurozone: "a weakening of growth" was recorded in a context of "high uncertainty", but in the future we expect a "gradual recovery". "The crisis is getting worse" for this reason "it is crucial to persevere in courageous and necessary reforms". In the afternoon Draghi will go to the Eurogroup where we will talk again about banks and state-saving funds.
INFLATION – Average inflation in the euro area will continue to moderate in 2012 and next year will "return below 2 per cent". In this way, the president of the ECB wants to underline that he will avoid both that inflation goes beyond a certain limit on the growth of prices, and that, conversely, these dynamics weaken excessively ending up in deflation.
THE ROLE of the ECB – President Draghi underlined the importance of the reforms implemented by the governments of the most fragile countries in the Eurozone: Ireland, Portugal and Spain have asked for financial assistance and are undertaking to restore their budgets. However, “the reforms came after years of delays and wrong economic policies. For this reason, the benefits are slow in coming”. Since ECB assistance can only be temporary, "structural reforms must be effective". As for Italy, Draghi has expressed his approval for the latest reforms of the Monti government. Good words also for the spending review which according to the president of the ECB will allow our country to reach its budget objectives in the short term.
GOVERNMENTS, PARLIAMENTS and CITIZENS they must work together to improve their countries. Draghi suggests that European leaders "be clear" and explicit in listing the necessary measures to be implemented to achieve "a sustainable economy and growth".
WHY STILL TENSION ON THE MARKETS THEN? – “We have made progress but we need a complete implementation,” Draghi said. The European Union is a "union based on national and aggregate stability", but the fundamental message that must pass is that "the Euro is here to stay and that the Eurozone will do everything to preserve it". The ECB president reiterated that there are four pillars through which to strengthen the union and that they must be followed in parallel: abanking union, to increase supervisory responsibility in the financial market, afiscal union, to strengthen fiscal policies, aeconomic union, through a mechanism that guarantees countries sustained prosperity and, ultimately, apolitical union, which strengthens the legitimacy of the monetary union.
WARNING – “But there are three issues to which particular attention must be paid,” explained Mario Draghi. A "greater sharing of political and economic sovereignty" must be guaranteed. It is necessary to remember that the "monetary union is an integral part of the treaty and that all members must commit themselves to apply them". Finally, we need to improve European integration through greater progress on democratic legitimacy and accountability.
Read the full text of the speech by Mario Draghi
