ABU DHABI (MNI) – The situation of the euro will be much better in
2012, European Central Bank President Mario Draghi said Thursday.
Speaking at a press conference on the margins of a seminar of
central banks of the Eurosystem and the Gulf countries, Draghi
highlighted that “in the last few months we have observed indeed
fantastic progress in improving the fundamentals in many countries, in
taking care of fiscal consolidation, in starting addressing structural
reforms, so that I would say the merits of the credit of these
countries, which had gone down, now it’s going up, now it’s improving.
And the overall situation for the euro will look much better in 2012.”
Draghi did not confirm for a questioner that he expected a
recession in the Eurozone. “We have seen a softening of the business
cycle with significant downside risks,” he said. “We’ve also seen very
tentative, first tentative signs of stabilization…at low levels of
economic activity.”
“All this is subject to downside risks,” he reminded. “In other
words, it can [get] worse.”
However, he added, “I am confident that the euro will be in better
shape in 2012 because I look at the progress that has been achieved on
the two root causes of the present situation, namely lack of fiscal
discipline and lack of structural reform. And I see both problems being
addressed with determination…That’s why I’m confident.”
In other comments, Draghi said that markets had underestimated risk
prior to Lehman only to overestimate it since then. He urged that “all
of us should learn to live without ratings” in the sense that sovereign
ratings should be “only one of the many inputs that form our final
judgment.”
–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com
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