ECB's Draghi urges Europe to reform to brighten dim prospects

Fri May 22, 2015 7:23am EDT
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By John O'Donnell and Axel Bugge

SINTRA, Portugal (Reuters) - The president of the European Central Bank called on euro zone countries to reform their economies, warning that future growth, in the face of entrenched unemployment and low investment, will be modest.

Although not the first time Mario Draghi has made such an appeal, his comprehensive argument in favour of reform underscores concerns that governments may be wasting the time that ECB money-printing has bought them.

"It should ... be clear that the argument that accommodative monetary policy constitutes an excuse for governments and parliaments to postpone their reform efforts is incorrect," Draghi told a gathering of the globe's central banking elite.

His remarks come as the ECB's trillion-euro-plus quantitative easing to buy chiefly government bonds bolsters sluggish lending and injects extra money into the euro currency bloc. That, in turn, eases pressure on governments to change.

In making his argument, Draghi warned countries that Europe's problems were far from over despite an economic outlook that was "brighter today than it has been for seven long years".

This improvement, he said, is marred by heavy debts across parts of the euro zone and entrenched unemployment that "haunts too many countries".


European Central Bank (ECB) President Mario Draghi arrives at the European Council ahead of an euro zone finance ministers meeting in Brussels, Belgium, May 11, 2015.   REUTERS/Francois Lenoir