Frankfurt

Slight recovery in 2013, reforms must continue, says Draghi

Oversight must be more stringent says ECB chief

Slight recovery in 2013, reforms must continue, says Draghi

Frankfurt, January 10 - The European Central Bank (ECB) at its meeting today voted unanimously to keep interest rates at 0.75%, while a slight recovery is in the cards for 2013, ECB President Mario Draghi said on Thursday. ''The economy should recover gradually during the year due to our accommodating monetary policy and improving market trust. As far as the economic outlook for the eurozone, we see risks continuing to decline,'' Draghi said. ''Our mandate is to keep prices stable, and not to seek full employment like the (US) Federal Reserve.'' While banks are ''still risk-averse'', credit conditions will improve in 2013, Draghi said, pointing to the growth in deposits in so-called peripheral countries and to a general improvement in funding and liquidity. Shoring up banks is crucial to ensuring monetary policies are enacted effectively, Draghi explained. The ECB's role as sole supervisor over failed European lenders is ''a crucial move'' in shoring up the continent's financial system and making integration a reality. ''There are signs of improvement as far as eurozone fragmentation, but this has not translated to the real economy yet,'' Draghi explained. The ECB is not yet contemplating an exit from extraordinary bailout measures. This will be done when it is ''natural'', he said. The first two mega bank bailouts, for example, ''were fundamental in adverting'' negative scenarios. The anti-spread shield will not be activated without a well-defined plan linked to several conditions, he said. Draghi went on to say it is essential to continue rebalancing budgets, and that eurozone countries must become competitive once more. ''Structural reforms are fundamental to correcting imbalances between eurozone countries,'' Draghi said. ''On the institutional level, the post-financial crisis situation has improved because national oversight agencies have become much more vigilant.''

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