Draghi urges governments to solve debt crisis, says ECB cannot

Mon Apr 15, 2013 10:59am EDT
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AMSTERDAM (Reuters) - European Central Bank President Mario Draghi on Monday put pressure on governments to push ahead with plans for closer European integration to address the euro zone crisis' core problems.

He said that was not something the central bank could do.

The ECB bought euro zone governments time to bring down debt levels and boost competitiveness with a new bond purchase program it launched in September, but plans for closer European integration have hit difficulties.

Germany dealt a blow to plans for a banking union at an informal meeting of European finance ministers last week, saying the project would require changes to European Union treaty.

Speaking to university students in Amsterdam, Draghi said that the euro zone's economic problems still loomed large and that calls for more action by authorities were understandable, but there were limits to what the ECB could do.

"Let me be clear: Undertaking structural reforms, budget consolidation and restoring bank balance sheet health is neither the responsibility nor the mandate of monetary policy," he said in the speech text.

The ECB could not substitute for actions that others, including the private sector, had to take, the Italian added.

Although there was a decrease in fragmentation in the financial markets, the ECB's very accommodative monetary policy was only partly passed on to the financing conditions faced by firms and households in some euro area countries, Draghi said.

Small- and medium-sized enterprises (SMEs), the backbone of the euro zone economy, are particularly hard hit by this development and the ECB is studying options to address the issue, but it has made clear that others must act, too.   Continued...

The European Central Bank (ECB) President Mario Draghi reacts during the monthly news conference in Frankfurt, February 9, 2012. REUTERS/Alex Domanski