The Euro fosters peace
Financial markets are not functioning well. Many households and small businesses cannot obtain bank loans said yesterday Mario Draghi, President of the European Central Bank in an event organized by the Catholic Academy of Bavaria.
“While sovereign debt markets have improved, bank lending is still very fragmented across the euro area. Credit in some countries is still difficult to obtain. The benefits of the painful actions undertaken so far have not yet materialized” said Draghi.
Draghi argued that the ECB’s crisis liquidity measures could not feed high inflation. It would not do so until the money flowed in the real economy.
The Italian ECB chief said ECB is taking its decisions in full independence. Therefore ECB have designed the Outright Monetary Transactions (OMT), so that these decisions could never be dominated by fiscal policies. OMT is a bond-buying program. It has been criticized by Germany and especially Bundesbank. Draghi stressed that the program would not only work in favour of the countries in crisis. In concrete terms it would also work in favour of German tax payers.
Euro fosters peace between nations and supports collective prosperity. “In many ways, we have already achieved this. The ECB has overseen the longest period of price stability in post-war history. We need to reinvigorate our social models by reforming our economies. And we need to harness the market mechanism in the service of humanity. In this way we can safeguard our primary capital, which is the human person” concluded Mr. Draghi.
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