The President of the European Central Bank Mario Draghi said that converging countries in the eurozone will make to address the fragilities of the eurozone much, much more easier. Europe cannot improve the governance and design and imagine a different monetary union with countries that are widely divergent. Mr. Draghi was reacting at the European Parliament in Brussels to an intervention by former Prime Minister Alfred Sant at the Economic and Monetary Affairs Committee (ECON) on the current economic situation and key monetary policy issues. Dr. Sant asked Mr. Draghi whether the first policy priority should be to ensure that steps are taken to contain and reverse the divergences that exist between the different regions of the euro zone rather than allow them to widen.
Dr. Sant said that Quantitative easing certainly seems to be helping to consolidate economic growth within the euro zone. Yet, as has been repeated even during this session, we are frequently warned that this growth can be fragile, is not going to be as strong as one would like and will not be creating as many jobs as we all would like. Dr. Sant noted the reaction by the ECB among others, has been that the eurozone needs to carry out more structural reforms – a mantra that has been followed for the past few years.
Yet with this strategy the productivity improvements that have been secured have mostly resulted from a drop in unit labour costs due to the shedding of labour – which has depressed demand inside the eurozone and made job creation problematic. Could it be that with the current policy mix, we might be heading towards a steady state, stable yes, but suboptimal, in output and social welfare terms? asked Dr. Sant.
Mr. Draghi said he agreed with Dr. Sant’s comments. ‘Well I could not agree more, the monetary policy can help a cyclical recovery. Would it help to increase productivity? No. That must be generated by other factors: Education, skills, competition in the public service market is a long list of factors, which by the way changes across countries which are not the same. But is this a good reason to change the monetary policy course? No, because this is the monetary policy course that will yield price stability, defined in a way I have explained before.
So it is not a good reason to change monetary policy. Are we entirely sure, that our monetary policy will deliver 100% of what we are after namely not only price stability but also a stably lower unemployment rate. No, many other things are necessary. Should we wait to have this, what I called quantum leap, or to invest our energies into better future governance of Europe because we have not achieved yet improvements in productivity and in economic structures? My sense is that these two are not at all mutually exclusive. We should move towards greater convergence and at the same time we should ask ourselves whether the design of this monetary union is solid, resilient or as I hinted before still quite fragile and we should address the fragilities. It is quite clear that the two things can’t go but together, Mr. Draghi said.

The interventions of Dr. Sant and Mr. Draghi


Il-President tal-Bank Ċentrali Ewropew Mario Draghi qal li l-Ewropa ma tistax ittejjeb il-governanza tagħha u jkollha għaqda monetarja jekk ikun hemm diverġenzi bejn l-istess pajjiżi tal-Unjoni Ewropea. Draghi qal jekk il-pajjiżi taż-żona ewro jikkonverġu jagħmluha aktar faċli li jkunu indirizzati ħafna u ħafna aktar il-fraġiltajiet taż-żona ewro. Il-President tal-Bank Ċentrali Ewropej kien qiegħed jindirizza l-Kumitat Monetarju u Ekonomiku tal-Parlament Ewropew (ECON) li ddiskuta s-sitwazzjoni ekonomika preżenti u kwistjonijiet monetarji. Mario Draghi iwieġeb għal kummenti ta’ Alfred Sant li staqsih jekk ikunx aħjar li l-Ewropa tara kif tnaqqas id-differenzi ekonomiċi li qed jiżdiedu bejn in-nord u s-sud, u bejn partijiet oħra tagħha.
Mario Draghi qal li kien jaqbel mal-kummenti tal-ex Prim Ministru Malti. Il-President tal-Bank Ċentrali Ewropew qal li l-Ewropa trid tersaq lejn aktar konverġenza u fl-istess waqt nistaqsu lilna nfusna jekk id-disinn tal-għaqda monetarja hix solida, resiljenti u fraġli. Irridu nindirizzaw il-fraġilitajiet taż-żona ewro, qal Mario Draghi.

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