FRANKFURT (MNI) – The European Central Bank’s ability to keep
government bond yields down for a long period is limited, since only
national governments can adopt the economic policies needed, the bank’s
new President said on Thursday.
Speaking at his first press conference as head of the ECB, Mario
Draghi called on Eurozone governments to get their fiscal houses in
order and implement growth-enhancing reforms.
“The first and foremost responsibility for maintaining financial
stability lies with national economic policies,” said Draghi. “In a
sense it is pointless to think that sovereign bond yields could be
stably brought down for protracted periods of time through external
interventions.”
Governments need to adopt a two-pronged approach the ECB president
said. “First, put your public finances in order, second undertake
structural reforms.”
The ECB’s continued purchase of government bonds, Draghi said, is
based on the need to ensure the smooth functioning of monetary policy
and not on individual government’s policies.
The bank’s bond-buying programme has three characteristics. “It is
temporary, limited in amount and third, justified on the basis of
restoring the functioning of monetary policy transmission channels,” the
new president said. “So we should keep this in mind as it responds to
all questions one might have.”
Draghi added that, “the relationship with conditionality should be
viewed under this perspective.”
–Brussels Newsroom, +324-952-28374; pkoh@marketnews.com
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