ECB's Draghi reiterates call for structural reforms

Greece’s financial woes and reluctance to appease its creditors is weighing down negotiation talks and frustrating negotiation parties

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

Mario Draghi, President of the European Central Bank (ECB), on Friday called on central bankers and academics of eurozone members to reform their economies as future growth predictions for the region remain fragile. Eyes were on Greece as Draghi stated that easy funding should not stop reforms.

"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," said president of the ECB.

Today the eurozone is showing its best ever performance since the gloomy days of the global financial crisis in 2008. Growth is picking up pace and inflation expectations have recovered. "The economic outlook for the euro area is brighter today than it has been for seven long years,” said Draghi 

Although the ECB’s quantitative easing program is keeping the region stimulated, Europe is still facing an economic struggle as growth is currently expected to be below 1 percent in the eurozone. High debt and strong unemployment levels embedded in the euro currency bloc "haunts too many countries," said Draghi, who - however - added that the “crisis on investment and employment are expected to unwind.”

"A cyclical recovery alone does not solve all of Europe’s problems," said Draghi, who stressed that structural and cyclical policies (including monetary policies) are separate.

Structural reforms are known to be vital for central banks, particularly those in the monetary union, as they raise both potential output and improve leeways in times of financial shocks. 

The ECB stresses “common governance of structural reforms” in order to “make resilience part of our common DNA,” says Draghi.

Greek leftist Prime Minister Alexis Tsipras is struggling to obtain fresh funding from Greece’s international lenders as he opposes to austerity measures requested from them. 

During Tsipras’ meeting with German Chancellor Angela Merkel and French President Francois Hollande on Thursday, he was told to make more effort while working with its creditors, in order to strike a deal. 

“It is clear that there must be more work with the three institutions. There is a lot to do," said Merkel, making reference to international lenders (European Union, European Central Bank and the International Monetary Fund), which have released emergency funds of 240 billion euros to Greece on two occasions. 

The debt burdened country has been doing anything in its power to unleash the much needed 7.2 billion euros ($8.2 billion) in bailout funds in order to meet upcoming debt obligations.

TRTWorld and agencies