FRANKFURT (MNI) – Continuity will characterize the European Central
Bank’s policies under new president Mario Draghi, ECB Executive Board
member Jose Manuel Gonzalez-Paramo said in a newspaper interview
published Monday.
Paramo told Spanish daily El Pais that “from Draghi, one must
expect continuity, as he said. The mandate of the bank continues to be
the same. The rate cut was not Draghi’s decision but rather the
Council’s, unanimously.”
It is not a contradiction to cut interest rates because of a
possible recession and at the same time demand that banks recapitalize
and that governments practice austerity, he said.
“The epicenter of the tensions continues to be in sovereign debt
and the connection it has to the weakness of the banking system,”
Gonzalez-Paramo explained. “Lack of confidence is reflected now in bank
financing. It is necessary to ask governments and banks to fulfill their
responsibility. The banks by recapitalizing and the governments by
applying plans of austerity and structural reforms. Europe has to
convince the world that it is growth potential and the risk premia will
sink.”
The euro is the “only future,” he said.
Asked about the ECB’s bond purchases and Italian troubles, Paramo
said that the ECB is not the lender of last resort. “The bank has acted
when it was necessary. We mustn’t forget that the creation of money,
over time, results in inflation. And the ECB sterilizes every euro of
bond purchases. The Italian problems are, above all, Italy’s, and they
are going to resolve these themselves.”
–Frankfurt bureau tel: +49-69-720-142. Email: dbarwick@marketnews.com
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