The delay in structural reforms may have political but never economic explanations in some countries. So Mario Draghi concluded his speech on the occasion of the event celebration of the 40 years of Prometeia held this morning in Bologna.
The president of the ECB has returned to talking about theurgent need to implement structural reforms in the individual countries of the European Union to allow the full deployment of the positive effects of monetary policy. Each country has its own list of things to do but, he underlined, "delays are a serious brake on growth".
"When it comes to giving substance to the reform agenda, it seems that in many eurozone countries hesitation prevails more than determination", he said, explaining that "certainly we must remember how the necessary changes are of such magnitude that they cannot be implemented without a broad consensus. But we must also remember how the delay in implementing the important structural reforms, which make a country richer and more capable of facing today's challenges, can sometimes have political, never economic, explanations”.
As for Italy, however, Draghi welcomed the recent regulation on the state of insolvency which, he said, "is to be judged positively" estimating that the average duration of bankruptcy proceedings will be halved and that the times of foreclosure procedures will decrease to a non-negligible extent.
Draghi, who only does one quick reference to the case of the restructuring of the four Italian banks ("It is natural - he said - to bring today's time closer to that of yesterday and while trying to avert the risk of a banking crisis in Italy to feel the lack of personality like that of Nino Andreatta"), he in fact insisted on the need Of "create the conditions for a rapid disposal of non-performing loans” which "must be part of the economic policy measures aimed at restoring conditions favorable to accumulation". Here the role of the Capital Union must have “the objective of harmonizing insolvency regimes and overall raising their quality, converging towards best practices. This should in turn widen the secondary market for non-performing items, thus facilitating their placement by banks. If the Union manages to develop European markets for securities backed by the assets of small and medium-sized enterprises, banks will in fact be able to more easily diversify the credit risks associated with loans to this category of enterprises, strengthening the credit offer.
NO IMPACT ON BANKS
ECB READY TO STEP UP MEASURES
In his speech Draghi also took the opportunity to respond to criticism some on the impact that the measures launched by the ECB would have had on the banking sector. “Our measures, especially the targeted longer-term refinancing operations, by reducing funding costs for new loans, have encouraged banks to restart lending. The increased competition on the markets has compressed rates, boosting credit and improving the macroeconomic situation. We have thus managed to reverse the vicious circle”, said Draghi, explaining that “these measures have not damaged the banks. Far from it. While they may have sometimes led to a contraction in net interest income, our measures have also led to capital gains on the banks' asset side, higher credit volumes and credit quality. Considering all these effects, the ECB staff estimates that the impact of our measures on the profitability of the banking sector has been essentially nil for the euro area as a whole”.
However, Draghi's assessment of the economic conditions after eight years of crisis seems optimistic. “The European economy finally seems to be standing on firmer foundations. The recovery is now driven by domestic demand rather than exports; has shown that it is capable of withstanding the recent slowdown in world trade”, said the president of the ECB, claiming the merits to be attributed to the Eurotower's monetary policy. “Monetary policy – said Draghi – has given a decisive boost to this. The tools put in place since June 2014, in particular the asset purchase program of private and public securities launched in September last year and expanded in January this year, are having the desired effects. Following the Governing Council's recalibration of our instruments this month, we expect inflation to reach our target without undue delay."
In any case, Draghi reiterated, as he had already had the opportunity to say at the last meeting of the ECB Council, that the ECB, if necessary, will intensify the use of its tools to achieve the objective of price stability.
