ECB's Draghi: governments must reform as confidence returning
November 23, 2012 11:21 PM EST
Confidence is returning to the euro zone and governments must now implement reforms to secure the bloc's future, European Central Bank President Mario Draghi said on Friday.
A top banker echoed the ECB chief's call for action, saying the bloc will break up "without a bold political move" and urging the euro zone to integrate economic policies more closely.
"I can address you today with a background of a relative return of confidence in the prospects of the euro area," Draghi said in a speech at the Frankfurt European Banking Congress on Friday.
"The return of confidence is justified."
He spoke shortly after the Ifo think tank's German business sentiment survey showed a surprise rise in November, its first in seven months.
Draghi said the ECB's new bond-purchase programme, dubbed Outright Monetary Transactions (OMT), had helped lead to much more benign market conditions in the 17-country euro zone.
"Given that the return of confidence was related in part to the announcement of the OMT, I would like to assure financial markets that we stand ready to implement this programme as and when required," Draghi added.
But he followed up by pressing governments to pursue structural reforms to shape up their economies and urged European leaders to work on deeper economic and financial union.
"That is what will fully restore stability to our continent," he said, calling in particular for a single banking supervisor under the ECB's roof.
"Without a bold political move the euro zone will fall apart," Blessing said. "There are only two options: more integration or break-up - and time is running out!"
Draghi said that in the summer the outlook had been increasingly pessimistic and the financial system was fragmented, leading the ECB to agree on its OMT plan.
The new plan, together with governments' push in June for a 'banking union' with the creation of a single banking supervisor had led to more benign market conditions, Draghi said.
"All banks established in participating member states would fall within the remit of the single supervisor," Draghi added. "This is important to ensure a level playing field."
(Reporting by Eva Kuehnen, Paul Carrel and Sakari Suoninen; Editing by Hugh Lawson)
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