Thursday 22 February 2018

ECB chief passes the buck to eurozone governments

European Central Bank (ECB) President Mario Draghi. Photo: Getty Images
European Central Bank (ECB) President Mario Draghi. Photo: Getty Images

THEY met in one of the most recession-ravaged countries in the eurozone, in a city so disillusioned with European policy that thousands of extra security personnel were drafted in to keep protesters at bay.

But if having such an uncomfortably close view of the eurozone crisis had any impact on the inner workings of the European Central Bank's governing council, they kept it remarkably well hidden yesterday.

This was not one of those 'bang, bang, bang' days when the ECB announces a series of measures to dig Europe's banks and economies out of the doldrums. It wasn't even one of those 'subtle hint that we'll do more soon' days.

Yesterday's catchphrase was closer to 'you've had your lot, now sort yourselves out', as a Spanish journalist quickly found out when he tackled ECB president Mario Draghi on Spain's suffering under austerity and asked whether the ECB shouldn't do more to help out struggling countries.

Mr Draghi responded with a platitude that will be very familiar to anyone who has followed the Italian's previous comments on Ireland.

"The government of Spain has made very significant efforts on policy reforms... we have to acknowledge that significant effort."

However, he then went on to tell us how the measures taken by the ECB -- chiefly the supply of €1 trillion of three-year money to banks -- had been "successful in avoiding a major credit crunch", before adding that we'd need "more time" for the full benefits of that wondrous operation to flow through.

The message was loud and clear. We've done our part and we've done it well -- the rest is now up to your governments.

The response didn't dissuade another questioner from putting it to Mr Draghi that "austerity isn't working" since unemployment is at a record high and Europe's economy is faltering.

The ECB boss remained impervious. Rather than conceding any legitimate doubts about the strategy of austerity, he launched into a lengthy answer about his vision for a European growth pact to complement the fiscal pact that is already in train.

The key, he said, was to put "growth at the centre" of policy, while insisting that there was "no contradiction" between this and "fiscal consolidation" -- his preferred phrase for compelling countries to reduce their budget deficits.

One questioner finally put it to him directly: was the ECB now saying that it had done all it could and that it was now up to governments to take it away?

Mr Draghi, who had already criticised some governments for not being ambitious enough and called on them to do more, answered in his typical style of dancing around a point that he doesn't want to address, by saying that the ECB's (unchanged) interest rates remained "accommodative" and that that "no one could deny that liquidity isn't abundant".

In other words -- yes.

Irish Independent

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