Brussels, 18/02/2013 (Agence Europe) - The European Central Bank is perfectly aware of the difficult economic situation in some eurozone countries, and says the main political challenge is minimising the impact of spending cuts rather than reducing them.
Thanks to stabilisation of the financial situation, economic indicators reveal that growth will very gradually return to the eurozone in 2013, explained the head of the ECB, Mario Draghi, to the European Parliament's Economic and Monetary Affairs Committee on Monday 18 February. In replies to questions from Jean-Paul Gauzès (EPP, France) and Elisa Ferreira (S&D, Portugal), he hoped that the monetary policies taken by the European Central Bank, like the supply of cheap cash, would soon find their way through to the real economy. Draghi did not deny that budget consolidation, which should be adjusted to suit the circumstances in each country, shrinks the economy in the short-term, but he said the big question was how to reduce the negative impact by striking the right balance between spending cuts and tax rises because taxes are too high in some eurozone nations; with rapid and effective structural measures for products and the labour market as a way of boosting exports and restoring a healthy balance of payments; and drawing up detailed mid-term budget programmes even if that has a high political cost.
EU bank resolution authority. Mario Draghi listed the three criteria for the new EU bank supervision authority (part of Banking Union) to be set up when the eurozone bank supervisory system is up and running: - the resolution authority needs enforceable resolution tools, for which the draft bank recovery and resolution directive will be key; it will need access to resolution financing from a European Resolution Fund provided from special ex-post levies on the private sector; and it should act independently with robust accountability and judicial protection.
Commending on Cyprus, Draghi said the financial aid programme would have to allow very close monitoring of anti-money-laundering rules. (MB/transl.fl)