The rises in interest rates on government bonds, linked "to fears of the reversibility of the euro", "are unacceptable and must be faced: the euro is here and it is irreversible". This was stated by the president of the ECB, Mario Draghi, in the press conference at the end of the Governing Council, reiterating the decision to keep the key ECB rates unchanged. The President declared that the Central Bank is ready to carry out "direct market operations" to restore financial stability in the Euro area but only if countries are first willing to ask the temporary bailout fund (EFSF) to buy their own sovereign bonds in the primary market. Furthermore, Draghi warned that the Governing Council "is considering other non-standard measures to repair the transmission mechanisms of monetary policy". The characteristics of these measures will be studied in the coming weeks.
Draghi also argued that “the excessive level of spreads and financial fragmentation are contrary to effective monetary policies and are dominated by the fear that dominates the moment.” The ECB president argued that we need to "create financial conditions and continue to push for structural reform and greater European integration".
The governments of the countries of the Euro area "must be ready to use the EFSF and ESM bailout funds where the circumstances require their intervention", Draghi reiterated.
As regards economic activity, Draghi declared that "economic growth in the Eurozone continues to be weak due to the drop in confidence in the financial markets".
Read complete speech by Mario Draghi
