“People are actually working on finding ways that the ESM could be used to recapitalize banks,” Draghi said. “The issue is not so much the use of ESM money to recapitalize banks but whether this could be done directly without having to go to governments.”
With creditor countries including Germany and Finland insisting they must be consulted before such funds are deployed, Draghi said there is a risk that “we have a big pot of money but nobody can touch it.”
Apart from funding “there are two other issues that are now hampering credit flow, one is risk aversion” and “the second is lack of capital,” Draghi said. “We cannot do much about the two other reasons about the slowing in credit.”
Italian Prime Minister Mario Monti and ECB President Mario Draghi pushed Germany to give up its opposition to direct euro- area aid for struggling banks. Monti further antagonized Germany by urging a roadmap to common borrowing.
European Central Bank President Mario Draghi said policy makers will keep focusing their crisis support on solvent euro area banks as he reiterated it’s not the ECB’s job to fix the cause of the region’s turmoil.
The president of the European Central Bank (ECB) said it was of "utmost importance" for leaders to impose fiscal discipline but also to generate growth by "facilitating entrepreneurial activities, the start-up of new firms and job creation".
However, Mario Draghi said that Europe's debt crisis means increased "downside risk" to growth.
Mr Draghi made the remarks after the bank left its key refinancing interest rate unchanged at 1%. He said economic activity "remains weak, with heightened uncertainty weighing on confidence".
The head of the European Central Bank is staying with his forecast for a gradual economic recovery this year in the 17 countries that use the euro.
1981-1991: Professor of international economics, University of Florence
1983: Counsellor to treasury minister
1984-1990: Executive director World Bank
1990: Consultant Bank of Italy
1991-2001: Director-general treasury ministry
2002: Joined Goldman Sachs as a partner
2002-2006: Deputy chairman Goldman SachsTrustee at the Princeton Institute for Advanced Study and also at the Brookings Institution, in Washington, D.C.
2006: Governor of Central Bank of Italy - He is a member of the Governing counsel and the General Counsel of the European Central Bank
Mario Draghi got off to a good start as president of the European Central Bank. Faced with a rapidly deteriorating situation in the eurozone, the Italian acted speedily late last autumn to head off what was threatening to be a serious credit crunch for Europe's banks.
FRANKFURT: European Central Bank President Mario Draghi said it was not up to the ECB to make up for other institutions' lack of action, suggesting that another long-term tranche of cheap loans was not on the cards for now.