FRANKFURT (MNI) – Despite price pressures from energy and
commodities and the adoption of unprecedented liquidity-providing
measures, the European Central Bank succeeded in convincing investors
last year that price stability would be maintained in the Eurozone, ECB
President Mario Draghi said in the introduction to the bank’s annual
report released Wednesday.
The ECB “consistently provided an anchor of stability and
confidence,” Draghi said. “This was evidenced by the fact that medium-
to longer-term inflation expectations remained firmly anchored…a
remarkable success in the light of adverse developments and a sign of
the high degree of credibility of the ECB’s monetary policy.”
Via the “timely” introduction of non-standard policy measures, like
bond purchases in secondary markets, bolstered collateral availability
and the extension of fixed-rate, full-allotment refinancing for banks,
the ECB was able to contain the deleveraging pressures stemming from
bank funding challenges, Draghi noted.
“The main purpose of these measures was to mitigate the effects of
strains in financial markets on the supply of credit to households and
businesses by ensuring that banks were not liquidity-constrained,” he
said.
Draghi also recognized the “bold and decisive action” taken by
Eurozone political leaders in signing on to tougher budget discipline in
the Fiscal Compact, expanding the European Financial Stability Facility
and front-loading Europe’s permanent bailout fund, the European
Stability Mechanism.
The central banker urged politicians to stick to their new fiscal
commitments: “If effectively implemented and enforced, this new fiscal
rule should improve the sustainability of public finances in the euro
area.”
[TOPICS: M$$EC$,M$X$$$,M$$CR$,MGX$$$]
